A 'tidal wave' of natural gas supply — the biggest yet — will reshape global markets, says RBC Capital

The biggest influx of liquified natural gas (LNG) supply is coming online and it will transform the global market, bringing about wide and enduring effects, said RBC Capital Markets.

"A wave of new LNG supply —the biggest yet— is set to reshape the global market in the coming years, with broader implications than prior growth given increasing inter-linkages between regional gas markets following the Russia-Ukraine conflict," analysts from the investment bank wrote in a note. 

The supply injection is likely to thrust the market into an extended period of oversupply by the end of 2026, which will remain until 2030, with prices possibly moving below double-digits, analysts such as RBC's Anan Dhanani have projected.

Futures for the Dutch Title Transfer Facility (TTF) hub, a European benchmark for natural gas transactions, were trading at $12.78 per mmbtu on Wednesday on the New York Mercantile Exchange.

Throughout the year, a growing chorus of analysts have warned that tepid demand growth coupled with looming waves of export capacity could lead to a massively oversupplied market. As a stream of planned infrastructure continues to flood the market, it's unclear if demand will increase to absorb each wave.

Oversupply and depressed prices underscore the bearish sentiments in the LNG sector, said Rystad Energy senior analyst Masanori Odaka. Suppliers are now increasingly prioritizing LNG used for shipping utilization over arbitrage opportunities, i.e. profit margins.

Commodity arbitrage involves the simultaneous or sequential buying and selling of commodities across different markets to profit from the price difference.

Global LNG trade has doubled in the last decade, growing from around 240 metric ton in 2014 to more than 400 metric