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Liquefied pure gasoline is not shaping up as the new commodity for 2023, with costs plummeting and provide seen outpacing new demand in 2023, Avi Salzman wrote in Barron’s this week.
LNG producers seemingly will add 20M metric tons of LNG capability to the market this yr whereas annual demand grows by simply 10M tons, in line with Morgan Stanley analyst Devin McDermott.
Chinese language demand for LNG fell ~20% in 2022 amid strict COVID lockdowns, and at the same time as demand began to crawl again late final yr as China started to reopen, analysts don’t see it returning to earlier ranges till late in 2023, with decrease price sources of vitality taking precedence, which can restrict spot LNG demand; demand may very well decline in India, as the facility and industrial sectors change to cheaper fuels.
The drop in costs seemingly will harm earnings of corporations within the business, McDermott stated, anticipating Cheniere Vitality (NYSE:LNG) to earn simply $8B in EBITDA this yr, in comparison with Wall Avenue consensus of $9.8M, whereas New Fortress Vitality (NASDAQ:NFE) seemingly will make $1.2B in EBITDA, vs. expectations for $1.8B.
A number of shares within the sector already are falling after rising sharply in 2022: Cheniere (LNG) has slipped 6% up to now month. Golar LNG (GLNG) is down 8%, and New Fortress (NFE) is off 13%.
Entrance-month February Nymex pure gasoline (NYSEARCA:UNG) (NG1:COM) closed -7.8% to $3.419/MMBtu this week, down for 4 straight weeks and 6 of the previous seven.
In the meantime, crude oil futures jumped to their largest achieve in three months this week.
