Spot LNG prices hit about $29 per million British thermal units (mmBtu) on Monday, and are expected to remain well above $25 per mmBtu this winter, said Jeff Moore, manager of Platts' Asian LNG Analytics division during the Platts APPEC 2021 conference.
A cold winter earlier this year pushed spot prices to a record high of $32.50 per mmBtu in mid-January as gas inventory was drawn down to meet the demand surge.
Following that, a pick up in economic activities from the easing of coronavirus-induced restrictions in many countries sent demand spiking further, causing gas storage levels to fall to multi-year lows towards the end of summer, said Sid Bambawale, LNG trading manager at Vitol during a separate panel discussion at the conference.
"This week, we start the winter season.. It's going to come down to one thing and that's the weather," he said, adding that a cold winter will send prices surging further.
Cold temperatures typically increase demand for gas for heating and limited storage capacity means companies are not able to stockpile volumes ahead of time.
Record high Dutch TTF gas prices are also having a direct impact on Asian prices and in turn sending a ripple effect throughout the industry, said Denis Bonhomme, vice president of LNG at TotalEnergies China.
"It's a tense outlook this winter," he added.
However, high prices and volatility is ultimately not good news for both buyers and sellers, said executives from Russia's Novatek and U.S. LNG company Cheniere Energy.
Platts is expecting prices to eventually fall more than $15 to about $11 per mmBtu next summer, Moore added.
India's top gas importer Petronet LNG said that high spot LNG prices on a sustained basis would dent demand for the super cooled gas.
"Current spot prices are high. They are not sustainable. I expect them to stabilize soon. If they continue, it will lead to demand destruction," said A. K. Singh, chief executive of Petronet at a shareholders meet in New Delhi.
(Additional reporting by Koustav Samanta in Singapore, Nidhi Verma in New Delhi; Editing by Jacqueline Wong, Christian Schmollinger and Louise Heavens)
By Jessica Jaganathan