The liquefied natural gas market (LNG) has a big problem: supply of the commodity is expected to outstrip demand for rest of the decade, said an analyst Wednesday.
The mismatch—bumper facilities coming on stream just as large buyers such as Japan are weaning away from LNG—casts doubts over one of the biggest alternative fuel stories in the past five years. Natural gas prices have already cratered to 17-year lows of around $1.70 per million British thermal units (mmBtu).
"Whereas there will be the supply response and ongoing strength in demand coming through for oil… there isn't necessarily the same amount of demand growth coming through for LNG while we are getting bombarded with LNG supply coming into the market because these projects take a much longer time to come to fruition," said Matt Smith, director of commodity research at New York-based ClipperData, a data company.
Supply has picked up pace recently.