The “super El Niño” climate phenomenon in 2026–2027 is unlikely to significantly reduce global demand for liquefied natural gas, despite the likelihood of warmer winters in Asia. Bernstein analysts reached this conclusion in a research note.
In their assessment, even one of the strongest El Niño events on record could reduce LNG imports in Asia by less than 1 billion cubic feet per day, or about 1% of global LNG imports. The analysts noted that such a decline would be in line with normal annual fluctuations in demand.
Japan as an indicator of the Asian market
To assess the impact of weather conditions, Bernstein used Japan as a proxy for the Asian market. The analysts explained this choice by the country’s reliance on imported LNG and the sensitivity of its demand to weather conditions.
The study found a strong relationship between heating degree days, which reflect heating needs, and liquefied gas consumption. At the same time, the correlation between cooling degree days and LNG use was found to be almost nonexistent.
Under a “super El Niño” scenario, winter heating degree days in Japan could decline by 19%. However, according to Bernstein’s estimates, LNG consumption would fall by only 2% — to 9.1 BCFD.
The analysts attributed the limited demand response to a substantial base component of LNG consumption that is relatively less dependent on weather conditions. If the 2% reduction is applied to the rest of the Asian market, regional LNG imports would decline by less than 0.7 BCFD, Bernstein said.
Which factors could have a greater impact on demand
According to the analysts, structural and market factors could have a greater impact on demand for liquefied natural gas than El Niño-related temperature changes. These include:
- inventory levels;
- the economic viability of switching to other fuels;
- LNG and coal prices;
- supply disruptions.
El Niño is a natural phenomenon in which changes in winds over the Pacific Ocean cause ocean water temperatures to rise and large amounts of heat to move into the atmosphere.
Earlier, The Guardian reported that the current El Niño had set a temperature record several months before the phenomenon’s expected peak. Sea surface temperatures in the central Pacific reached 3.05°C above the 1991–2020 average, surpassing the previous record of 3.02°C set in late November 2015.
