By Reuters

LONDON- Asian spot liquefied natural gas (LNG) prices rose this week to their highest level in over seven months as high temperatures in Japan and South Korea boosted power demand and amid heightened geopolitical risks due to tensions in the Middle East.

The average LNG price for September delivery into north-east Asia was at $12.80 per million British thermal units (mmBtu), industry sources estimated. This is the highest level since mid-December and up from $12.00/mmBtu last week.

“The spot LNG market has been bullish this week, with Europe and Asia both gaining almost $1/mmBtu from the end of last week,” said Alex Froley, senior LNG analyst at data intelligence firm ICIS.

“High temperatures in Japan have boosted energy demand. Traders are also keeping an eye on tensions in the Middle East,” he said.

Hot weather in Japan and South Korea is driving gas burn, drawing terminal LNG stocks lower. However, the consumption has yet to translate into substantial spot LNG demand, said Samuel Good, head of LNG pricing at commodity pricing agency Argus.

The killing of a Hamas leader in Iran has raised concerns that the 10-month war in Gaza between Israel and Hamas was turning into a wider Middle East war.

“Market participants have increased their risk premium based on the higher risk that supply disruptions may occur in the coming months if the tensions escalate further,” said Hans Van Cleef, chief energy economist at PZ Energy.