Prices for liquefied natural gas (LNG) have increased to their highest since mid-2015 in Asia, boosted by plans by OPEC and Russia to cut crude oil production.
Spot prices for Asian LNG increased 50 cents from last week to around US$8.1 per million British thermal units (mmBtu), Reuters reported on Thursday.
The news agency cited traders as saying that the main drivers behind the rise in prices were a deal between the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC producer Russia to slash crude output to pump up prices, as well as cold weather in northern Asia and Europe that lifted LNG demand for heating and power generation use.
To remind, these factors also boosted last week’s prices to their highest in 2016 at that time.
“Higher oil prices will translate into higher LNG import prices for the majority of LNG consumers,” consultancy Wood Mackenzie said in a report on the impact of the OPEC deal on the LNG markets on Thursday.
“Currently, around 80% of LNG supply is sold on contracts that price LNG as a function of oil. But indexation varies widely. For every $1/bbl increase Brent, expect a $0.07- $0.15/mmbtu increase in oil-indexed LNG contract prices,” Wood Mackenzie said.
LNG World News Staff