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Asia’s currently tepid LNG demand is set to become robust during the summer months as models suggest higher-than-usual temperatures across north Asia.
A rise in Asian demand will support increased U.S. exports of liquefied natural gas, which are already at record highs, Reuters columnist Gavin Maguire notes.
Early this month, Asian spot LNG prices for delivery into northeast Asia fell for the first time in five weeks as demand is weak while inventories are high, according to industry sources quoted by Reuters.
However, as we move into the hottest summer months, rising temperatures will boost gas demand for power generation to meet air conditioning demand in Japan, South Korea, Taiwan, and Hong Kong. These are set to see average temperatures about 5-6% higher than the long-term average through August, according to data from LSEG cited by Reuters’ Maguire.
Earlier this year, strong demand in Europe pushed U.S. LNG exports higher.
Following the off-peak spring season, demand in both Europe and Asia is set to increase in peak summer and remain high through the autumn as Europe needs a lot more LNG to fill up its gas storage sites depleted below the five-year average after the end of a colder winter.
Increased demand is a boon to U.S. LNG exporters, which are also ramping up supply with new export plants.
The U.S. Energy Information Administration (EIA) expects the U.S. benchmark Henry Hub spot price to average about $4.00 per million British thermal units (MMBtu) in 2025 and $4.90/MMBtu in 2026, compared with $2.20/MMBtu in 2024. Higher natural gas prices in 2025 and 2026 would be the result of strong export growth that persistently outpaces U.S. natural gas production, the EIA said its Short-Term Energy Outlook (STEO) in June.
The EIA expects that domestic consumption and exports combined will increase by nearly 4 Bcf/d this year, while U.S. dry natural gas production will grow by less than 3 Bcf/d.
