27 June 2019
- The global LNG market remains very supplied. We have maintained this view for months. Early evidence for short-term supply tightness discussed on number of occasions proved short-lived. EU in-flow of LNG is at multi-week low. Our proprietary data for LNG market SELLING PRESSURE also implies that the downward move has been exaggerated.
- Short-term / spot demand for LNG improved considerably in the last couple of 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 on the diagram below. There is validity in the argument that the spring/summer gas re-charging phase will support prices but we expect the strength of this impact to be significantly weaker than last year. Demand from the on-going heatwave is also helping.
- Our assessment of global macroeconomic conditions has improved further. 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. This represents the biggest short-term macro risk for the LNG market.