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Global Oversupply Equals a Tough Year for LNG Exporters

2020 is going to be tough for LNG exporters. A warm winter in the northern hemisphere has depressed demand in North America, Europe and Asia.[i] This together with the outbreak of the corona-virus means liquid natural gas prices are poised to test record lows. In essence, demand is insufficient to absorb rising global supplies of this super-cold fossil fuel. Consequently, the terms of trade have moved in favour of customers and against LNG exporters, who are no longer price-makers but price-takers. For example, in Asian markets, LNG fell from around $8 per million British thermal unit in January 2019 to just $3 per million British thermal unit in February 2020.[ii].

Reasons for oversupply

In a nutshell, “the global oversupply of LNG has been building and building and building,” states Ron Ozer, founder of gas-focused hedge fund Statar Capital LLC in New York.  Read more

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