Petronas: spot LNG prices to remain volatile

Malaysian energy giant and LNG player Petronas expects spot liquefied natural gas prices to remain volatile in the next period as they continue to trade around $40/MMBtu.

The energy crisis that unfolded in 2021 led to gas and LNG prices surging to a record high.

“Asian spot LNG prices soared above $50/MMBtu, a historic high, due to factors including
higher demand as economies re-open, rising competition for gas between Europe and Asia, a hotter summer and colder winter, as well as a coal crunch in China which led to a spike in demand for gas,” Petronas said in its annual activity outlook for 2022-2024.

The JKM spot LNG price surged to $56.326/MMBtu in October. It hit the highest level for the LNG benchmark for Asian spot LNG since Platts launched it in early 2009.

The price declined in the meantime but it continues to trade at around $40/MMBtu.

According to Platts, the JKM for February reached $39.915/MMBtu on Tuesday.

“The LNG spot prices in the coming years are also expected to experience volatility due to the weather pattern and also potential change in policy, altering the supply-demand dynamics,” Petronas said in the new report.

The energy giant said this underscores the need for continuous investments in the energy sector to ensure “reliable and sustainable supply of energy in an equitable manner.”

In addition, Petronas also said that the path towards sustained oil demand recovery “remains fragile and uncertain due to the emergence of new Covid-19 variants that trigger fresh waves of lock-downs.”

Brent crude oil currently trades at about $78.90 a barrel.

“While most industry players are optimistic with the economic recovery, they still remain cautious. Thus, the smarter approach would be to strengthen efforts collectively and be ready to face the oil price volatility,” Petronas said.

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