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JKM for November LNG delivery sinks $1.039 on week to $9.925/MMBtu on ample prompt supply, poor end-user demand

Singapore — The Asian LNG benchmark JKM was assessed at $9.925/MMBtu Friday, down $1.039/MMBtu week on week, on ample prompt supply against poor end-user demand, amid significant softness in crude, NBP, and JKM derivatives.

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The slide back to single-digit levels, not seen since August 1, set a strong bearish tone to early-winter trading.

Crude, NBP and JKM December derivative prices all posted significant losses week-on-week.

Dated Brent crude at Singapore close Friday reached $81.37/b, down $3.725/b week-on-week, while Dated Brent at the London close Thursday reached $81.29/b. UK gas hub NBP month-ahead prices slid 40 cents/MMBtu week-on-week, touching a low at $9.061/MMBtu before rebounding to end the week at $9.299/MMBtu. The NBP two-months-ahead prices slid 44.9 cents/MMBtu week on week, touching a low at $9.47/MMBtu before rebounding to end the week at $9.653/MMBtu.

The JKM December derivative contract posted significant losses, sinking $1.80/MMBtu week-on-week to reach $10.55/MMBtu Friday.

The near-term fundamental balance shifted sharply through the week, with ample supply left unsold through early-November to early-December. Weakness on the front of the curve seemed to elicit limited Northeast Asian demand response as typical cargo optionality nomination periods crept closer, market participants widely reported.

Earlier in the week, a trader was heard to have bought a cargo for delivery within Japan, South Korea, China around very late-November to early-December, with potential additional flexibility, at around $12/MMBtu. A major Japanese end-user was heard to have possibly bought a cargo on Thursday, for delivery within November 13-30 from a portfolio player, heard priced in the low-$10s. Market participants reported potential flexibility to accept wider quality and volume range. A Japanese trader was also heard to have sold an H2 November delivery cargo loading from Malaysia's Bintulu, with most sources citing the deal price at $10.10-10.30/MMBtu DES Northeast Asia.

Forward January discussions were also heard to have concluded in deals earlier in the week, with at least one Chinese end-user heard buying a cargo from a European trading house for January 1-5 delivery at around $12.40-$12.45/MMBtu.

On tenders, new sell tenders included cargoes from Angola, Papua New Guinea and Australia's North West Shelf. The PNG LNG tender offered a single cargo for delivery into Northeast Asia or India or Middle East between end-November and mid-December. The tender closed October 10, with validity until October 12. The cargo was heard possibly awarded in the low-$10s but counterparty and laycan details could not be confirmed.

BHP issued a sell tender offering a November 27-29 loading cargo from North West Shelf. The tender closed October 10, with same day validity. The tender was heard awarded but pricing details remain unclear.

Angola LNG offered a single cargo loading November 7-10 but the cargo was heard available for delivery no further than South China. The tender closed October 10, with validity until October 11.

Results emerged from an older Tangguh LNG tender offering three FOB cargoes ? two December cargoes and one January cargo. All three cargoes were heard awarded, with the January cargo heard awarded to a trader at JKM-linked pricing.

The spotlight on buy tenders was on the India and Middle East markets.

BPCL issued a partial cargo buy tender seeking a 1.6 Tbtu cargo for delivery in H1 November. The tender closed October 9, with validity until October 10. The tender was heard to have not been awarded.

Petronet was heard to have awarded its tender for nine cargoes for 2019 delivery into port Dahej or Kochi. The tender was heard possibly awarded to a trading house at mid-to-high 13% oil slope, according to market sources. The delivery windows are January, February, April, June, July, August, October, November and December on a DES or CFR basis. The tender closed September 27, with validity until October 12.

Indian Oil Corp's buy tender seeking four cargoes for 2019 delivery into India was heard awarded last Friday October 5, upon expiration of bid validity. The tender was heard to have been awarded at low-15% slope for February delivery, mid-11% slope for August delivery, mid-to-high 11% slope for October delivery and low-13% slope for November delivery, market sources said.

Turkey's Botas issued a tender seeking a total of 13 cargoes between November and February. One cargo is being sought for late November, four in December, five in January and three in February.

--Edwin Loh,

--Edited by Maurice Geller,