- Geopolitical Uncertainty Weighs Heavily on LNG Stocks.
- Low Spot Rates Continue to Pressure Earnings.
- Awilco LNG and Cool Company Struggle, While Nakilat Leads Gains.
The UP World LNG Shipping Index (UPI) rose 1.12% last week, while the S&P 500 fell 3.1%. While geopolitical tensions, specifically regarding U.S. energy policy and revived interest in Nord Stream 2, have been more influential on LNG shipping stocks despite consistently low spot rates, quarterly results from Awilco LNG and Cool Company continue to demonstrate the challenges created by these low rates. Still, the UPI has demonstrated strength, aided by its international orientation and the potential for U.S.-listed companies to fuel further gains, reports LNG Shipping Stocks.
UPI vs. S&P 500 Performance
The UPI ended at 168.68 points, up 1.87 points (1.12%), while the S&P 500 plunged sharply by 3.1%. The week before, UPI had also risen by 1.43 points (0.87%), ending at 166.82 points. The effect of low spot rates is secondary to the increasing uncertainty about U.S. energy policy. The recent interest in Nord Stream 2 has more questions than answers, most notably how this fits with promoting U.S. LNG exports. Suspicion of the U.S. has intensified, putting more pressure on LNG shipping stocks than poor rates have.
Despite these problems, the UPI continues its surge higher, closing in on the 169-point level in a seeming rising trend. Technically speaking, two U.S.-listed firms are in place to help fuel a potential breakout.
Stock Performance and Notable Movements
While the UPI rises, most stocks are being cautious, trading sideways. Yet some stocks have experienced double-digit moves, mostly lower. Awilco LNG posted the biggest decline of the week, losing 15.1%. The stock broke lower after what seemed to be a bottoming-out period. Part of the reason for this persistent weakness is that charters are not eager to sign up for long-term contracts. Cool Company CEO Richard Tyrrell has said recently that charterers continue to wait, feeling they don’t have to commit to deals yet.
Cool Company also continues to be plagued by low rates, although the wider trend in the sector is the retirement of older steam-powered LNG ships. As TradeWinds’ Lucy Hine noted, yet another steamship is now for sale, a reflection of the changing market dynamics.
Golar LNG Dropped
Golar LNG dropped 14.7% in an unexpected swoon following Monday’s small rally. The decline came on the eve of its Q4-24 earnings release, yet no definitive explanation for the selloff exists. Its focus continues to be on relocating FLNG Hilli to South America, securing financing agreements on its floating LNG units, and completing an Argentine contract for FLNG Hilli.
New Fortress Energy and FLNG both created a hammer candlestick pattern, indicating the potential for reversal. NFE fell 1.3%, and FLNG fell 0.7%, with both stocks having potential for a rebound.
Declining Stocks
Malaysia’s MISC fell 3.3%, back to an important support level, while BP lost its recent acquisition momentum but continued to trade higher than its prior range even after falling 3.2%. Dynagas LNG Partners also lost its recent momentum, back to its initial price, though it hasn’t yet traded back into the lower range. Among the largest gainers, Korea Line Corporation increased 6.6%, trying to break away from its support level, which it retested at the end of last year. Capital Clean Energy Corporation also demonstrated strength, increasing 5.6% and breaking out of its November trading range, with its next target being a move above the $20 level.
Top Gainers
Tsakos Energy Navigation added 4.2%, showing a similar chart pattern to Korea Line Corporation. Nakilat, one of the key drivers of the UPI’s gains, climbed 3.8%, finally breaking a resistance level that it struggled with last summer. Japanese LNG companies remained steady, with modest movements in the range of 0.5% to 1.2%, as they continue to test long-term resistance levels.
Market Outlook and Key Considerations
The short-term scenario for the LNG shipping business is cautiously optimistic, although volatility should increase over the next several weeks. Although LNG spot rates continue low, their overall contribution has been minimal to most UPI-listed companies. The market is observing key resistance points, which will decide if stocks break out higher or consolidate further.
In the longer term, prospects are good. LNG demand is likely to expand, fueled by management-led actions, long-term deals, and changing industry dynamics. Investors should keep a close eye on policy shifts, competitive positioning, and corporate earnings releases to get further insight into the direction of future market action. Even with geopolitical uncertainty and short-term market volatility, the sector’s fundamentals remain robust, leaving scope for UPI to extend its upward march.
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Source: LNG Shipping Stocks
