Summary
The UP World LNG Shipping Index (UPI) extended its advance, rising 0.85% to 172.14 points and moving further above the key 170 threshold. The index now stands just six points below its all-time high, underscoring the sector’s resilience even amid mixed individual stock performances.
We have titled this commentary “growth weakening.” Although it may seem contradictory, this most accurately describes the events of the past week in the LNG shipping sector. Efforts to achieve more substantial growth often resulted in growth gaps at opening prices, but further expansion was rejected during the week, and prices ended up lower than at the opening. Nevertheless, several companies closed higher than their previous week’s closing prices.
UPI & SPX
The UP World LNG Shipping Index, which tracks listed LNG shipping companies, gained 0.16 points (0.09%), closing at 172.30 points, while the S&P 500 index gained 1.22%. The chart below illustrates the performance of both indices with weekly data.
Broader View
Preparations for winter are progressing smoothly, with European storage facilities filled to an average of 80 per cent. The geopolitical situation is also stable, which is reflected in the development of the UPI. Although its growth was slower than the S&P 500, the trend continues after surpassing the 170-point mark. Interestingly, despite the minimal increase in the UPI, a significant number of companies have opted for a slight correction. The ratio of companies experiencing growth to those declining was 10 to 11. Efforts to achieve more substantial growth often resulted in growth gaps at opening prices, but further expansion was rejected during the week, and prices ended up lower than at the opening. Nevertheless, several companies closed higher than their previous week’s closing prices.
Constituents
New Fortress Energy (NYSE: NFE) recovered from last week’s decline and gained 78.6%, closing just below its previous stabilised levels. NFE issued a report announcing success in a tender to supply gas to Puerto Rico. Exmar (BSE: EXM) experienced the second-highest growth, increasing by 9.4%.
Capital Clean Energy Carriers (NYQ: CCEC) rose by seven per cent, reversing last week´s decline below support and returning up to a sideways level. The next move will be decided again.
Two companies gained 5%, with Cosco Shipping Energy Transport (SS: 600026) increasing by 5.6% and Awilco LNG (OSE: ALNG) rising by 5%. While ALNG nears resistance, Cosco continues to grow, maintaining a growth gap for the third consecutive week, with intraday gains twice surpassing weekly gains.
ADNOC L&S (ADX: ADNOCLS) also maintains its upward trajectory, increasing by 4.6% and continuing the bullish trend. It has returned to last year’s end-of-year levels and is not far from its historical peaks.
The chart for Tsakos Energy Navigation (NYSE: TEN) shows interesting development. It opened with a gap up but then declined for the rest of the week. As a result, it created a red candle on the candlestick chart, but it was still a week of growth, with the price increasing by 1.9%.
MISC (KLSE: 3816) increased by 1.6%, with higher gains rejected. The price is therefore moving sideways and gathering strength for a new move; we shall see which direction prevails.
We must also mention Nakilat (QSE: QGTS), which increased by only 0.3%, but more importantly, it likely halted the further minor decline. The price remains close to the support level, moving within an uptrend bracket.
Golar LNG (NYQ: GLNG) fell 3.7%, but more importantly, it clearly broke through support.
Dynagas LNG (NYSE: DLNG) has returned to the upper boundary of the previous support area, with a decrease of 3.1%.
All three Japanese companies also experienced losses. ‘K’ Line (TSE: 9107) decreased by 2.1%, while NYK Line (TSE: 9101) fell by 1.7%. Both companies thus also moved back into the upper part of their previous ranges, but remain above them, suggesting potential for further growth. The third company, Mitsui O.S.L. Lines (TSE: 9104), is fluctuating around the support area.
Flex LNG (NYSE: FLNG) experienced fluctuations in both directions but ultimately closed down by 1.2% and fell back to the August price level before the increase. The next move remains uncertain.
Another trio, this time oil and gas producers with a minority LNG fleet, BP (NYSE: BP), Chevron (NYSE: CVX), and Shell (NYSE: SHEL), lost ground during the week, moving between -0.8% and +0.7%.
Crystal Ball
Despite the growing global uncertainty caused by the US administration, our outlook remains optimistic. However, we expect increased volatility in the coming weeks. LNG spot rates rise, but the impact remains marginal for most UPI constituents. The market is watching for potential breakouts at key resistance levels, which could determine the next direction of prices.
Our outlook remains steadfastly positive in the long term. The burgeoning demand for LNG, bolstered by situational or management-driven actions and the potential for new long-term contracts, paints a promising picture. Investors should watch policy developments, market competition, and upcoming corporate earnings for further direction.
About UPI
Established in 2020, the UP World LNG Shipping Index is a rules-based stock index family designed to measure the performance of publicly traded companies worldwide involved in the maritime transportation of liquefied natural gas (LNG). This unique index covers 21 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 completing an email registration. The trial includes full access for fourteen days.
Final Note
This report primarily relies on technical analysis using weekly data.