MILAN, Sept 30 (Reuters) - Asian liquefied natural gas (LNG) gas prices rose this week on fresh Indian and ongoing South Korean demand as a forthcoming production outage in Australia was set to curb global supply.
Month-ahead prices for November delivery hit two-month highs of $6.10 per million British thermal units (mmBtu), up 35 cents from last week, helped by firming Brent crude oil after OPEC members agreed on output cuts.
Brent crude rallied 7 percent this week to $49 a barrel.
The Gladstone LNG export facility run by Australia’s Santos is to shut down one production line from early October to around Oct. 23, feeding into bullish sentiment on prices as supply tightened.
Both production units at Cheniere Energy’s Sabine Pass plant in the U.S. are already offline owing to maintenance that is not due to finish for about three more weeks.
India’s Bharat Petroleum is seeking one cargo for delivery in October, November and December, with peer Indian Oil Corporation looking for a single November shipment.
Previously traders had warned that price-sensitive Indian demand could be limited by rising prices, but rallying Brent crude may provide more headroom for those companies to keep spending on gas.
Importers in India tend to compare spot LNG prices against competing oil-derived fuels. Rising oil prices could keep demand alive for LNG, one trader said.
Angola LNG offered to sell its second post-shutdown cargo loading Oct. 4-6.
For winter, another trader expected prices to ease significantly.
“The market is offered up for November, but not so much for winter. Brent is pulling things up now and there’s a bit of buying in the Far East,” he said.
“But there is so much new LNG to come ... Angola is now back, the Middle East if offering cargoes to the Far East and Australia is ramping up. Unless you believe a cold winter is coming, I don’t see current conditions extending into winter.”
Korea Gas Corp, however, is arranging for extra shipments from long-standing Qatari supplier RasGas to replenish reserves and cater to extra demand as additional nuclear power stations are taken offline for maintenance.
In the wake of the country’s biggest earthquake, four nuclear reactors with combined capacity of 2,770 megawatts were taken offline as a precautionary measure.
Korea Gas Corp is also expected to tap a leading oil major for LNG supply as well as another Middle Eastern producer, one trader said. (Editing by David Goodman)