- The UP World LNG Shipping Index (UPI) hit a record high last week, buoyed by strong global market sentiment and the start of winter preparations.
- While oil and gas drilling companies also saw modest gains, most experienced minimal declines.
- The performance of the LNG shipping sector reflects a growing demand for electricity, especially in South Asia.
In the latest update for Week 34 of 2024, the UP World LNG Shipping Index (UPI) achieved a record high, reflecting a significant rise in LNG shipping stocks. This surge is due to strong global market sentiment and the onset of winter preparations, which have heightened demand for liquefied natural gas, particularly in regions like South Asia. Major Japanese and U.S.-listed LNG companies led the gains, showcasing a robust performance amid broader market volatility and seasonal shifts.
Market Performance
The UPI, which tracks LNG shipping companies, rose by 9.52 points, or 5.91%, closing at 170.49 points. In comparison, the S&P 500 index increased by 3.93%. The chart below illustrates the weekly performance of both indices.
Sector Analysis
The UPI’s new all-time high comes as global stock markets show positive sentiment, influenced by seasonal volatility and increased energy demand. The rise in LNG shipping stocks is driven by the winter season’s approach and heightened electricity needs in South Asia.
Main Contributions
Japanese companies played a significant role in this growth. Kawasaki Kishen Kaisha (TSE: 9107) saw the most notable increase, rising by 12.6%. Mitsui O.S.K. Lines (TSE: 9104) and Nippon Yusen Kabushiki Kaisha (TSE: 9101) also performed well, with gains of 9.1% and 10% respectively.
Among U.S.-listed companies, Excelerate Energy (NASDAQ: EE) experienced a 5.1% gain, while Dynagas LNG Partners (NYSE: DLNG) and Flex LNG (NYSE/OSE: FLNG) saw increases of 4.1% and 4%, respectively. Flex LNG announced a stable $0.75 dividend and extended its debt refinancing beyond 2028.
Other Notable Movements
Awilco LNG (OSE: ALNG) and Tsakos Energy Navigation (NYSE: TSE) gained 3.9% and 3.7%, respectively. Meanwhile, oil and gas drilling companies like Shell (NYSE: SHEL), Chevron (NYSE: CVX), and BP (NYSE: BP) showed modest gains, with Shell maintaining a steady trend and BP addressing previous declines.
Declines and Adjustments
Most declines were minor, with SM Korea Line (KRX: 005880) falling by 1.5%. Capital Product Partners (NASDAQ: CPLP) is near its support line and is set to rebrand as Capital Clean Energy Carriers Corp. by August 26, with ongoing adjustments to its LNG carrier financing.
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Source: LNG Shipping Stocks
