* Spot LNG prices hit $8.5/mmBtu as market tightens
* Strong demand from China's gasification program
* Spot LNG prices on par with oil-indexed contracts
* Market outlook remains weak due to rising output
SINGAPORE, Oct 6 (Reuters) - Asian spot prices for liquefied natural gas (LNG) edged to their highest level since January this week, as the market gradually tightened ahead of the peak-demand winter heating season and as consumption in China soars amid its huge gasification program.
Spot prices Asian LNG <LNG-AS> rose 10 cents to $8.50 per million British thermal units (mmBtu), their highest since January this year.
Climbing Chinese demand amid its huge program to move millions of households away from coal to gas heating as well as a push for LNG as a transport fuel have helped drive prices 55-percent higher from their 2017 lows.
Average January to August 2017 Chinese LNG imports were 2.8 million tonnes, up from 1.9 million tonnes during that period of last year and 1.6 million tonnes for 2015, Thomson Reuters Eikon data showed.
Prices have also been supported by strong imports from top buyers Japan and South Korea, which have been stockpiling in preparation of the peak-demand winter heating season, which is about to start in the northern hemisphere.
Strong overall demand has tightened global LNG markets, which have been marked by oversupply since 2014 as production, especially in Australia and the United States, has jumped.
Despite the tighter conditions, many traders expect the spot LNG market to be capped, which is also reflected in the forward curve which sees prices fall back below $6 per mmBtu by mid-2018.
"Let's not get overexcited. We saw exactly the same thing last year. Prices always rise ahead of winter. Much depends on how cold this winter will be in North Asia. Once that's over, it all depends on supplies. Watch the last batch of Australian production come online. If they start up on schedule, prices will fall right back to their most recent lows," said one LNG trader.
Current spot LNG prices are also now also slightly above oil-indexed prices, which are seen as a resistance level for spot markets.
On the supply side, more production is expected to emerge from Papua New Guinea and Russia's Sakhalin II plant, and output in Australia is also expected to rise as the last batch of its mega-projects gradually starts up production.
Australia expects to increase LNG exports by 16 percent from mid-2018 as $180 billion as new projects hit their stride, nearly catching up with Qatar, the world's top supplier.
Australia's LNG exports are forecast to climb to 74 million tonnes in the year to end-June 2019, from 63.8 million tonnes forecast for this year and 52 million tonnes last year. By comparison, Qatar last year exported 77.6 million tonnes.
(Reporting by Henning Gloystein; Editing by Joseph Radford)