“Buyers have to secure the winter LNG, they have to build up their inventory, that’s the factor that’s making the market tight,” one Asia-based trader said.

Higher prices in Asia continued to pull cargoes from the Atlantic, with an FOB spot cargo that Statoil offered from its Snovhit terminal likely heading east, an increasingly common destination for Norwegian cargoes.

Traders reckoned the cargo would fetch at least a $2 premium to British gas prices on the National Balancing Point, currently around $10.60 per mmBtu for October.

The market was also closely eyeing Japan’s nuclear situation, where several reactors were downed in a March earthquake and others have been kept offline due to safety worries, boosting demand from the world’s largest LNG buyer.

Japan’s largest utility, Tokyo Electric Power Co. used a record amount of LNG in August after it shut two additional reactors for maintenance.

The country’s nuclear plant usage fell to a record low in August, but some say Japan’s new prime minister may be more pragmatic than his predecessor about restarting reactors.

Several utilities are conducting first-stage stress tests, but the tests are just the first step in a long process involving several approvals before reactors can be restarted.

“If (reactors) start coming online, LNG usage will drop off...the market will definitely be less tight,” one market source said, but added that even if Japan sees some nuclear units come online, winter stockpiling will keep LNG demand robust.  

Analysts expect prices to continue rising as winter begins in earnest, in part due to the nuclear outages in Japan. 

“There is good reason to believe that Japan’s landed LNG pricing could surpass $20 per mmBtu this winter, as demand increases and the LNG spot cargo environment remains tight,” said First Energy analysts in Calgary. 

“The already tight spot cargo situation will be compounded by the upcoming maintenance of three Qatari mega-trains that will begin this fall.”

Qatar, the world’s number one exporter of LNG, will have several plants shut for maintenance, with Qatargas taking three trains offline in the autumn and Rasgas to shut one LNG train for maintenance in January.

A tight LNG shipping market may exacerbate the rising cost of LNG for some buyers, with some ship owners asking over $100,000 per day. 

The cost of insurance alone for LNG tankers has risen to more than $14,000 per day as naval containment of piracy fails and surging global demand spurs traffic through high-risk waterways, increasing the risk of hijack and armed attack.

But some market sources said some older ships were becoming available for spot shipments of LNG at much lower rates ranging from $40,000 to $60,000 per day. 

In the US, the near $7 premium of British benchmark prices over US prices has meant the US has received only a few contracted cargoes this month. Ample supply thanks to increases in shale gas production have dented import needs. Currently only three cargoes are heading to North America.