Katie Bays of Height Securities said 2017 may be a turning point for LNG markets as buyers - who have sat on the sidelines for several years and refrained from signing new contracts with LNG export terminals - begin to change their tune.
“U.S. gas production remains robust and prices are low, bolstering confidence that Henry Hub-linked contracts can offer long-term savings relative to their oil-linked peers,” Bays wrote in a note.
Which Companies Will Benefit
Bays said the momentum would boost fortunes for projects like Cheniere Energy, Inc. (NYSE: LNG)’s Corpus Christi, Liquefied Natural Gas Ltd (ASX:LNG)’s Magnolia, and Tellurian Inc (NASDAQ: TELL)’s Driftwood LNG project, among others.
Yuji Kakimi, president of JERA Co, the largest LNG buyer in the world, sees long-term growth in LNG demand keeping pace with projections (5-6 percent annualized) but predicts prices remaining below $10/MMBtu. U.S. export terminals are among the only proposed projects that can conceivably profit at $10/MMBtu.
At last check, shares of:
United States Natural Gas Fund, LP (NYSE: UNG) rose 2.55 percent to $7.03.
VelocityShares 3x Long Natural Gas ETN (NYSE: UGAZ) advanced 7.64 percent to $17.19.
VelocityShares 3X Inverse Natural Gas ETN (NYSE: DGAZ) fell 7.75 percent to $5.36.
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