Morgan Stanley optimistic about LNG price surge: Asian demand rebounds, LNG prices may reach a three-year high

Morgan Stanley states that due to high temperatures in Asia and European restocking demand driving market consumption, liquefied natural gas (LNG) prices are expected to soar to their highest level in more than three years. According to Morgan Stanley analysts, Asia's benchmark natural gas prices are forecast to surge in the third and fourth quarters to $25 per million British thermal units (Btu), which means there is more than 30% upside compared to current forward curves. This price level was last seen in early 2023—when European countries, aiming to make up for the shortfall of Russian pipeline natural gas supplies, drove a global spike in energy prices.

Morgan Stanley believes that even if the Middle East conflict is resolved in the short term, gas prices will still rise. Previous conflicts have already led to the Strait of Hormuz being closed, cutting off about one-fifth of global LNG supplies—mainly from major Persian Gulf producers Qatar and the UAE. Core markets including China and India have already started to see a rebound in consumption, while the window for securing inventory ahead of winter is rapidly shrinking.

Analysts stated: "In March and April, the sharp decline in global import volumes helped offset most of the lost supply. But as the urgency to rebuild inventories increases and summer heat intensifies, demand has begun to recover."