6 June 2019
- The LNG market remains very supplied. We have maintained this view for months. Early evidence for short-term supply tightness discussed on a number of occasions proved short-lived. On the other hand, our proprietary data for LNG market selling pressure still implies that the downward move may not be over yet.
- Short-term / spot demand for LNG improved considerably in the last 2 months. This statement is valid mainly for Europe where we see low renewable output, firm domestic demand and the usual seasonal re-stocking cycle. The result is displayed in a diagram in the full report (available on request). 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. Indeed, the LNG price is still not attempting to price this in.
- Our assessment of global macroeconomic conditions has somewhat improved but remains firmly bearish. This is reflected in the proprietary Global Macroeconomic Index. As anticipated in our last research note, short-term lending activity has picked up. We expect further improvement as counter-measure of the on-going trade dispute between the two largest economies. We are seriously worried by the weakening purchasing power of key LNG importers and the political decisions impacting trade flows.