Intro4u2u

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Spot trade of liquefied natural gas (LNG) skidded to a near-halt this week as the world’s top buyers in Asia have fulfilled their winter needs and as the economic downturn slows power and gas demand.

Asian buyers assessed spot LNG at around $9 to $10 per million British thermal units (mmBtu), roughly at parity with crude oil, which fell for a fifth straight session to trade below $53 a barrel on Thursday.

That is less than half the above $20 per mmBtu spot price that Asian buyers paid as recently as September.

But even at that price, buyers were not interested in purchasing the gas chilled to its liquid form for transport by ships beyond the reach of pipelines, with top buyers like Japan, South Korea and Taiwan covered for the winter, one buyer said.

“Now there are not even any discussions anymore,” said a source with a North Asian trading house. “If the winter became colder at some point, maybe buyers would seek another cargo but now they are not even talking.”

The financial crisis has pushed economies around the globe into recession, slowing power demand as production activity suffers and weighing on LNG.

The chairman of the Japan Gas Association, Akio Nomura, has already said the world’s top buyer Japan is unlikely to buy further cargoes on the spot market this year and that gas demand will fall as a consequence of the crisis.

Japan imported 5.504 million tonnes of LNG last month, down 8.6 percent from a year earlier, data showed on Thursday.

Sellers of the gas were looking to sell at around a $3 per mmBtu premium to the National Balancing Point, which closed on Wednesday at around $8.90 per mmBtu for December delivery.

In recent years the Pacific basin has attracted the bulk of the world’s spot cargoes as Asian users were more concerned with supply security than price, often paying a hefty premium over other regions.

But the recent drying up of Asian spot trade was beginning to weigh on Europe as well, an LNG broker said.

“Those cargoes on flexible contracts, which have tended to be diverted to Asia over the last two years are going to backstop markets and are arriving in Europe,” the broker said. “But there, it’s been relatively warm and the demand destruction affects all regions,” he added.

Distrigas’ Methania LNG tanker was headed back to Zeebrugge this week, according to AISLive ship tracking data, after failing to find a buyer for its cargo in more than a month at sea.

And in the United States, LNG imports are down from a year ago so far in November, consistent with figures for the rest of the year.

Daily U.S. LNG imports for the week beginning Nov. 10 averaged 0.82 billion cubic feet (bcf) per day compared with an average 1 bcf per day in November a year ago, according to Tudor Pickering and Holt.

But analysts say U.S. LNG imports could rise as the global recession dents LNG demand worldwide and new production projects come online in 2009-10.

“We expect an uptick in U.S. LNG imports in the coming year,” said JP Morgan analyst Scott SPeaker in a note this week.

The depth of the U.S. market, or its ability to absorb LNG even at times of low demand, could mean that new volumes come to the United States once demand elsewhere is saturated, regardless of the low U.S. price.