Russell: LNG Looks Poised to Follow Crude Oil's Plunge

Reuters

LAUNCESTON, Australia, Jan 18 (Reuters) -- In contrast to the carnage in crude oil markets, liquefied natural gas (LNG) prices in Asia have enjoyed relative stability for the past three months, but it's unlikely the calm will persist much longer.

Spot Asian LNG prices <LNG-AS> ended last week at $5.60 per million British thermal units (mmBtu), about 28 percent below the recent peak of $7.80 reached on Nov. 22.

In contrast, Brent crude oil has dropped 46 percent from its recent peak in early October to trade currently around $28.55 a barrel.

The relative outperformance of spot LNG holds over the longer term as well, with the price of the super-chilled fuel having dropped 68 percent since its all-time high of $20.50 per mmBtu in February 2014.

Brent has declined by 75 percent since its 2014 closing peak of $115.06 a barrel, reached on June 19 of that year.

While both markets would appear to suffer from excess supply and less than stellar demand growth, what appears to be happening is that LNG is currently trading with a lag to crude.

The reasons for the decline in oil appear well understood by the market, even if the current drop below $30 a barrel is viewed as unsustainable for an extended period given the amount of global production that will be loss-making.


1234

View Full Article

Copyright 2016 Thomson Reuters. Click for Restrictions.

WHAT DO YOU THINK?

Click on the button below to add a comment.
Post a Comment
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.

Related Companies
Events  SUBSCRIBE TO OUR NEWSLETTER

Our Privacy Pledge
SUBSCRIBE



Most Popular Articles

From the Career Center
Jobs that may interest you
Account Manager - Degassing Services - Western Region
Expertise: Refinery Specialist
Location: Long Beach, CA
 
Technical Sales Rep. - Decontamination/Turnaround Services
Expertise: Oil Terminal / Storage Management
Location: Houston, TX
 
Biologist (On-call)
Expertise: Chemical Engineering
Location: San Diego, CA
 
search for more jobs

Natural Gas : $3.64/MMBtu 0.27%
Brent Crude Oil : $53.93/BBL 1.83%
Light Crude Oil : $50.93/BBL 1.66%
Updated in last 24 hours