Summary
The UP World LNG Shipping Index (UPI) decreased by 3.36% last week, closing at 158.18 points, while the S&P 500 lost 1.99%. The decline in the UPI coincided with global market downturns, influenced by the Federal Reserve meeting and early-week losses in the LNG shipping sector. The index breached significant support levels, including the long-term MA-40 moving average.
Tsakos Energy Navigation recorded the most significant loss at 10.2%, while other notable declines included Chevron (-7.2%) and New Fortress Energy (-6.6%). Gains were limited, with Cool Company up by 1.1%. The outlook for the UPI suggests potential further declines in the short term despite a positive long-term view supported by industry improvements, such as retiring older vessels.
UPI & SPX
Last week, the UP World LNG Shipping Index (UPI), which tracks listed LNG shipping companies, lost 5.51 points, equivalent to 3.36%, closing at 158.18 points. The S&P 500 index lost 1.99%. The chart below illustrates the performance of both indices with weekly data.
Broader view
The UPI experienced the anticipated decline, as did nearly all global stock indices. The primary factor behind the downturn in the U.S. market was Wednesday’s Federal Reserve meeting, although the decrease in the LNG shipping sector had already begun on Monday. Additionally, non-U.S. stocks contributed to the decreasing trend during the latter half of the week.
There was a break in UPI support at 163 points, and the long MA-40 moving average (equivalent to the 200-day average) was also breached. Meanwhile, the shorter MA-10 moving average (comparable to the 50-day average) is near the MA-40. Trading volume for stocks was above average. The highest single-stock gain for the week was only 1.1%.
Constituents
Let’s look at the market performance, starting with the biggest losers. Tsakos Energy Navigation (NYSE: TEN) experienced the most significant decline, falling by 10.2%. This marks the only double-digit loss, bringing its value back to the level it was at the end of 2022. TEN continues to trend downward.
Chevron (NYSE: CVX) also faced a notable loss, down by 7.2%. It is approaching a support level at $140, which would complete a rise followed by a bounce-off resistance at $162.
New Fortress Energy (NASDAQ: NFE) is undergoing a healthy correction, with a loss of 6.6%. This is the first correction after a month of gains. The candlestick’s shadow indicates optimism, showing buyers outnumbered sellers, keeping the price in the upper third of its weekly movement and creating a bullish shadow below the candlestick’s body.
Excelerate Energy (NASDAQ: EE) saw a loss just slightly less than NFE’s at 6.5%. However, buyers were less effective in this case, despite a minor rank that has formed recently, suggesting that the decline may continue.
Several companies experienced losses starting with the number four. Golar LNG (NASDAQ: GLNG) decreased by 4.9%, representing a correction in its uptrend. The shape of the candlestick is indecisive and somewhat concerning. Shell (NYSE: SHEL) declined by 4.6%, further intensifying its downtrend; however, it has reached some support and may stabilise soon. BP (NYSE: BP) had the same loss and returned to its support level. Flex LNG (NYSE/OSE: FLNG) fell by 4.3%, continuing its decline but not particularly sharply.
Asian companies have seen more modest losses due to their declines starting later. Korea Line Corporation (KRX: 005880) lost 2.9%, Nakilat (QSE: QGTS) declined by 2.6%, and MISC (KLSE: 3816) fell by 2.1%. Japanese companies performed as follows: NYK Line (TSE: 9101) decreased by 1.3%, MOL (TSE: 9104) by 0.9%, and “K” Line (TSE: 9107) by 0.1%.
Two stocks on the list managed to avoid more significant declines and finished in a potentially bullish formation: Awilco LNG (OSE: ALNG), which fell by 1.1%, and Dynagas LNG (NYSE: DLNG), which remained unchanged.
On a positive note, Cool Company (NYSE/OSE: CLCO) was the biggest gainer, rising by 1.1% to correct a previous loss. Exmar NV (BSE: EXM) also saw an increase, up by 0.7%.
Crystal Ball
Our outlook remains unchanged but is more negative for the rest of the year. With the crossover of UPI and the moving averages, there is a risk of a more significant decline in the UPI. Of course, this negative assessment is mainly due to the short-term view of investors (or our reading of the candlestick charts), for whom spot rates are harmful, and plenty of attractive opportunities outside the sector exist. Our long-term view is positive, and we expect situationally driven actions, such as the scrapping of steam-powered vessels, to strengthen the industry and companies in the UPI.
About UPI
Established in 2020, the UP World LNG Shipping Index is a rules-based stock index family designed to measure the performance of worldwide publicly traded companies involved in the maritime transport of liquefied natural gas (LNG). This unique index covers 19 companies and partnerships worldwide, representing over 65% of the world’s LNG carrier fleet in 2020. The UP Index offers premium services with freemium and trial access to charts. With Freemium, users can access the basic UPI vs S&P 500 chart after email registration. The trial includes full access for fourteen days.
Source: UP-Indices.com via LNGshippingStocks.com