Analyst Noah Parquette says the consensus view is “over-optimistic” about the medium term prospects for the sector, with spot rates likely to remain weak for longer than is widely believed.
While the analyst says the LNG sector is starting to see long term structural changes, he believes the increase in demand is already mostly matched by the newbuilding orderbook.
“Furthermore, we see a continued global backdrop of low oil prices as a negative for the industry, as it reduces the price discrepancy between oil-indexed LNG and other price mechanisms, limiting East-West arbitrage opportunities and dampening the economic rationale for new liquefaction projects, particularly in the US,” Parquette said.
