Liquefied Natural Gas Demand Grim - Analyst

June 20, 2012 11:11 AM EDT
Demand for liquefied natural gas (LNG) has been solid so far this year, partially due to increased demand from Japan which uses LNG as a mid to peak source for electricity generation. Demand for LNG in Japan peaked as citizens in the country lost their stomach for nuclear energy after the Fukashima disaster.

Global supply of liquefied natural gas is improving as new production plants are scheduled to start operating, according to Bank of America Corp. "Tightness in global LNG markets is starting to ease," Sabine Schels, a commodity strategist, wrote in a report dated yesterday.

LNG imports are coming down from lofty highs as inventories appear ample heading into summer. As a result, demand looks "grim", notes Schels.

Although LNG isn't the bulk of natural gas use, the news might be seen as being negative for dry gas and the United States Natural Gas ETF (NYSE: UNG).

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