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India started buying prompt shipments of liquefied natural gas from the spot market after a two-month absence, indicating a rebound in demand as the nation exits a deadly phase of the Covid-19 pandemic.
Petronet LNG Ltd. and Indian Oil Corp. awarded tenders for delivery over the next few months, the first spot purchases since March, according to traders with knowledge of the matter. Both cargoes cost more than $11 per million British thermal units, an unusually high level for Indian buyers able to turn to alternatives such as fuel oil and liquefied petroleum gas.
Global energy use is quickly recovering from the devastation wrought by the pandemic, and the positive signal from India will help to push natural gas prices higher, though the nation’s demand recovery is still uneven and not all buyers there are eager to boost purchases. LNG spot prices for North Asia have rallied due to robust Chinese demand and supply issues, and been further bolstered by a surge in European gas benchmarks to near their highest in almost 13 years help.
India is emerging from the Covid-19 wave that overwhelmed healthcare infrastructure and triggered localized lockdowns, causing a slump in natural gas consumption in the transport, commercial and industrial sectors. Now, daily cases have sunk back below 60,000 from more than 400,000 at the outbreak’s peak, and curbs are being eased.
India’s return to the spot market is in stark contrast to just last month, when companies were seeking to cancel and divert shipments due to a glut at import facilities.
