Morgan Stanley: Asian Demand Rebounds, LNG Prices Could Rise 30%
Taylor Wilson
Morgan Stanley expects the Asian LNG benchmark to reach $25/MMBtu in Q3–Q4, implying over 30% upside from the current forward curve — whether that target is met hinges on Asian heatwaves and Europe's restocking race hitting at the same time.
What does $25 mean in context?
Morgan Stanley forecasts the Asian LNG benchmark at $25/MMBtu for Q3–Q4, implying more than 30% upside versus the current forward curve.
That price level was last seen in early 2023, when European nations scrambled to replace Russian pipeline gas and pushed global prices to crisis highs.
This means → Morgan Stanley sees today's supply-demand tightness approaching the severity of that post-invasion energy crunch.
The Strait of Hormuz is nearly shut — how is the gap being filled?
Qatar and the UAE's Persian Gulf LNG accounts for roughly one-fifth of global supply; the Strait of Hormuz is effectively near-closed.
The gap is being covered two ways: higher utilization at other facilities and new North American capacity — May global supply was only 1 million tonnes below year-ago levels.
In plain terms = the supply side is barely holding, but the cushion is razor-thin. Any incremental demand can tip prices sharply higher.
What changed on the demand side?
Global LNG imports fell sharply in March–April, partly offsetting the supply loss.
But consumption is recovering as India and China ramp back up, supported by expectations of summer heat.
Morgan Stanley expects June–July Asian temperatures to run above seasonal norms, sustaining higher gas demand. Analysts wrote: "Demand has begun to recover as the urgency to rebuild inventories rises and summer heat arrives."
Why are European inventories the key variable?
European storage sits 17% below year-ago levels and roughly a quarter below the 10-year average.
The pre-winter restocking window is narrowing fast, which will intensify global competition for LNG cargoes.
This means → if Asian heat keeps pulling demand while Europe is forced to accelerate restocking, the two forces resonate together — and that is the core condition for Morgan Stanley's $25 target to be met.
Why doesn't a Middle East de-escalation change the thesis?
Analysts Devin McDermott and Martijn Rats note that even if Middle East tensions ease near-term, the bullish price logic still holds.
This reflects a thesis built not on the geopolitical event itself but on supply cushions already compressed to a minimum — any demand increment amplifies price elasticity.
Content is for reference only, not financial advice.