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LNG tankers divert to Asia, floating storage rises after price spike

Thu, 19th Sep 2019 16:46

By Ekaterina Kravtsova

LONDON, Sept 19 (Reuters) - At least five laden liquefiednatural gas (LNG) tankers changed course from Europe to Asia anda rising number of other tankers were being used as floatingstorage following a spike in Asian LNG prices in the past week,trade sources said.

While there may be specific reasons for the re-routing ofindividual cargoes, the diversion of so many tankers at the sametime indicated a long market, meaning sellers were holdingpositions in the expectation of higher prices, the sources said.

Spot Asian LNG prices jumped last week after a rise inEuropean gas prices and extended gains this week following onfrom the oil price spike due to the attacks on Saudi Arabia'soil facilities.

The price for LNG delivered to Asia in the second half ofOctober grew to around $5.70 per million British thermal units(mmBtu) this week, over a $1.00 rise from two weeks ago.November delivery traded above $6.00/mmBtu this week.

European LNG price benchmarks, Dutch gas for October andNovember deliveries, were trading at around $4.10/mmBtu and$5.64/mmBtu, respectively, on Thursday.

Four of the tankers that changed direction are carryingcargoes from the United States, while one is sourced fromNigeria, Refinitiv vessel ship tracking data shows.

Energy Liberty, chartered by Japan's Tokyo Gas, hadbeen signalling Barcelona as a destination but changed courselast week and is now heading to Japan, where hot weather hasincreased gas demand in the past month.

Methane Alison Victoria made a U-turn from Europe towardsthe Cape of Good Hope after loading in Nigeria last week and islikely to go to Asia.

Cheniere's Yari LNG sailed towards Cape of Good Hopethis week too, having loaded a cargo in the U.S. three weeksago, headed to Europe, then waited near Gibraltar for ten days.

Diamond Gas Sakura loaded a U.S. Cameron LNG cargo inmid-August and was first expected to go to Gibraltar but is nowheading to the Indian Ocean, having paused near the PanamaCanal.

Gaslog Saratoga, chartered by trading house Gunvor, wasgoing to Italy, before changing route late last week and is nowheading to Pakistan, where Gunvor won two delivery slots forOctober delivery in a recent tender.

Some of the tankers are sailing quickly, implying sellersmade quick decisions and were now in a hurry to deliver. Butothers, like Diamond Gas Sakura, may still have no exactdestination and are simply being slowly moved to Asia whereprices increased, one LNG trader said.

In Asia, at least three cargoes, BP's Sean Spirit,Petronas' Seri Cemara and Royal Dutch Shell's Gallina,are identified as a floating storage, data firm Kpler said.

(Reporting by Ekaterina Kravtsova; editing by Sabina Zawadzkiand Chris Reese)

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