Barclays reiterated its ‘overweight’ stance and 2,850p target price on shares of Royal Dutch Shell, pointing to the solid outlook for Asian demand of liquified natural gas that the broker said should support long-run prices and provide better trade opportunities.
Over the next two years, new project start-ups in the US and Australia would keep LNG markets slightly oversupplied, capping prices in the near-term.
However, in the long-run, from 2020, Barclays estimated LNG would again exceed supplies, making them more positive on prices.
Reinforcing that trend, Asia, which accounted for 70% of demand, was seen continuing to show a preference for keeping natural gas in its energy mix.
“This in turn should support long-run prices and provide better trade opportunities to companies. Shell and Total look to us best positioned for this trend with their exposure to LNG.”