Hot Weather in Japan Drains LNG Inventories to Five-Month Low

(Bloomberg) -- Hotter-than-normal weather in Japan has seen utilities burn through liquefied natural gas, increasing the need for more fuel before the seasonal peak in demand during the northern hemisphere winter.

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Inventories held by power utilities fell to their lowest level since April on Sunday, in line with last year but below their five-year average, according to government data released Wednesday. That came as gas-fired power generation in Tokyo rose to the highest since March earlier this month as the heat increased demand for air-conditioning.

Temperatures are returning to nearer normal levels at the start of fall, allowing utilities to lean on supply from long-term contracts to refill inventories. However, the Japan Meteorological Agency forecasts colder-than-normal weather in the nation’s most populated areas from December to February, which could increase the need for spot LNG purchases that would pressure global supply and lift prices.

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