16 May 2019
- The LNG market remains very supplied. We maintain this view in both short and medium-term. Preliminary evidence for short-term supply tightness discussed in our previous research notes materialized but the impact from it was quickly overturned by the medium-term supply reality. Our proprietary data for LNG market SELLING PRESSURE demonstrates that the aggressive selling pressure is piling up again for weeks #20-25.
- Short-term / spot demand for LNG improved considerably in the last 2-3 weeks. This statement is valid for mainly for Europe where we see low renewables output, firm domestic demand and the usual seasonal re-stocking cycle. There is validity in the argument that the spring re-charging phase will support prices but we expect the strength of this impact to be significantly weaker than last year. Our proprietary BUYING PRESSURE index is also supporting the above argument.
- Our assessment of the global macroeconomic conditions has deteriorated. Short-term lending activity picked-up and we expect further improvement as counter-measure of the on-going trade dispute between the two largest economies. Also, the LNG energy intensity which was our main concern for months is showing encouraging signs. We are seriously worried by the weakening purchasing power of key LNG importers and the political decisions impacting trade flows.#