Growing liquified natural gas (LNG) demand will reduce market oversupply in the first half of 2021, the global rating agency Fitch Ratings said on Monday.
The agency said the volumes of gas in European storage facilities already normalized due to the cold winter in the northern hemisphere.
'This has led to a price rally in Europe and Asia, benefiting gas producers' performance,' it said.
However, Fitch said, the LNG deficit is temporary and we expect excess liquefaction capacity to weigh on prices later this year when weather conditions improve and demand reduces.
Fitch expects the LNG oversupply could return later in 2021.
'We estimate that global LNG imports continued to increase by about 2%-3% in 2020 despite the pandemic. Assuming similar growth rates in 2021, the global market should tighten compared with 2020 given a lack of significant capacity additions, but is likely to remain well supplied,' the rating agency said.
By Sibel Morrow