LNG Prices Soar 5-Fold in 6 Months... "Could Rise 4 Times More This Winter"

Rapid Surge from $5 to $26 in Early March
Citigroup "Could Reach $100 Due to Winter Cold Snap"

[Asia Economy Reporter Hyunwoo Lee] As international natural gas prices surge, the price of liquefied natural gas (LNG), mainly used for heating and power generation during winter, is also skyrocketing. Although prices have already increased more than fivefold compared to March, experts warn that if the severe cold continues through the winter, prices could rise nearly four times more than the current level.

According to Bloomberg on the 23rd (local time), global investment firm Citigroup forecasted in a report that international LNG prices could soar to around $100 per 1 MMBTU (unit of heat) this winter. This is a warning that LNG prices, which have already surged sharply since early March, could rise even further.

The JKM LNG futures price traded on the New York Mercantile Exchange (NYMEX) in the United States recorded $26.8 per 1 MMBTU on the day. This is already more than five times higher than the $5.3 recorded in early March. The JKM LNG futures price is composed of spot LNG price indicators traded in major importing countries such as Korea and Japan and is used as the standard indicator for international LNG prices.

Citigroup cited supply disruptions and concerns over severe cold as the main reasons for the price surge. Recovery from hurricane damage to plants concentrated in the U.S. Gulf of Mexico, a major natural gas refining area, is delayed, and frequent abnormal weather events raise concerns about severe cold worldwide this winter. In its report, Citigroup stated, "Global natural gas prices will continue to rise in a parabolic curve over the coming weeks or months," adding, "As winter approaches, concerns over supply shortages are becoming more serious, and there is significant potential for prices to rise further due to sudden demand surges or supply disruptions."

The rapid increase in LNG demand for power generation due to countries' eco-friendly policies is also cited as a major factor driving price increases. Lorenzo Simonelli, CEO of global energy company Baker Hughes, explained in an interview with CNBC, "There is no fuel more efficient than gas in reducing carbon emissions in the power sector," adding, "To reduce carbon emissions, dependence on gas in the U.S. and Europe will inevitably increase."