6 December 2018
- We have held the view that the LNG market is very well supplied for months. Back in September we wrote: “As far as we are concerned, there is little supply-based evidence to suggest that the LNG market should stay as firm as it has been for the last couple of months.” The market developments proved this statement to be both correct and timely issued. Our current assessment of spot LNG supply continues to suggest abundant supply.
- Short-term / spot demand for LNG has contracted in Q4. The gas storage cycle in Europe is now complete. The bullish signal from the aggressive recharging phase between April and September propagated to the LNG market which peaked at the end of September. Spot demand in Europe is starting to emerge again. We see a similar trend for demand in Asia. Both developments are likely to provide support to prices as we approach Q119.
- As it stands today, our assessment of the global macroeconomic conditions is outright bearish. Short-term lending activity has deteriorated further which is never good news for global trade. We estimate that the EU Energy Intensity (EI) is rising from the bottom reached one month ago. This is encouraging and fits well with other signals we receive for the gradual improvement of the short-term demand. It is still too early to conclude that we will register a spike in demand even remotely similar to the one seen in Feb-March.