12 July 2019
- The global LNG market remains very well supplied. We have maintained this view for months. The result is a market which is on its knees. Early evidence for short-term supply tightness during weeks #13-15 and #23-24 discussed on number of occasions proved short-lived. Regardless of the evidence collected on the spot market, our forward supply assessment is somehow more price-positive. Our proprietary data for LNG market SELLING PRESSURE also implies that the current downward move has been largely 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. We still expect the strength of the summer gas storage re-charging phase to be significantly weaker than last year as storage is running well ahead in the cycle.
- Our assessment of global macroeconomic conditions has improved further. This is reflected in the strong rebound of the proprietary Fossil fuel energy intensity index. We were worried by the weakening purchasing power of key LNG importers and the political decisions impacting trade flows. This represented the biggest short-term macro risk for LNG and price largely reflected this fact. The situation has somehow eased off. Renewed talk by the Fed about possible monetary easing may have something to do with it.