The global gas glut could reach multi-decade highs in the coming years, Morgan Stanley says

Natural gas prices have plunged as the world grapples with an oversupply after a warmer-than-expected winter. 

The recent heyday in liquefied natural gas boosted prices and profits, spurring a wave of investment in the sector. Over 150 million tonnes per annum worth of LNG capacity is currently under construction, marking a "record wave of expansion," Morgan Stanley said in a recent note. For a market that currently stands at over 400 mtpa, this represents a "significant supply growth."

"We expect gas market oversupply to reach multi-decade highs over the coming years," Morgan Stanley's commodity strategists said.

Natural gas prices currently stand at $1.83 per MMBtu (metric million British thermal unit), down about 22% so far this year.

A warmer-than-normal winter has dampened demand for heating and consequently gas in key LNG consuming countries.

"Global natural gas prices have been trending downwards owing to mild winter conditions experienced in the Northern Hemisphere regions like US, Europe and North Asia," Zhi Xin Chong, S&P Global's head of emerging Asia gas and LNG markets, told CNBC.

The resulting higher-than-average storage levels has had a "major impact on prices" which have been trending downwards since October, he added.

The U.S., which is the largest consumer of LNG in the world, reported its warmest winter on record. Europe logged its second warmest winter temperature on record. Similarly, Japan's average temperature this winter was also 1.27 degrees Celsius higher than normal for the second warmest winter on record.

On a monthly basis, benchmark natural gas spot prices hit an all-time low in February at $1.72 per MMBtu And the lower prices could pose opportunities for some parties.

"Countries in Europe will