Are Oil Prices Going Up Or Down? LNG Flows Hint At Answer
- 01. Oil Prices Are Currently Going Down, With LNG Flows Signaling Continued Near-Term Pressure
- 02. Current Oil Price Trend: Confirmed Downward Momentum
- 03. LNG Flows as the Leading Indicator for Energy Prices
- 04. Global LNG Supply Glut Expected by Late 2026
- 05. Key Players Shaping LNG Market Trajectory
- 06. Forecast: Will Oil Prices Reverse Course?
Oil Prices Are Currently Going Down, With LNG Flows Signaling Continued Near-Term Pressure
Oil prices are going down in May 2026, with WTI crude falling 16.2% for the month to $87.76 per barrel on May 29, 2026, and Brent crude dropping 16.94% to $91.70 per barrel. This decline follows reports of a preliminary US-Iran ceasefire agreement that would ease restrictions on shipping through the Strait of Hormuz, a critical route for about one-fifth of global oil and LNG flows. However, LNG flows provide crucial context: flexible LNG cargoes are increasingly arbitraging between regions, strengthening price correlation across benchmarks and signaling that oversupply pressures will persist through late 2026.
Current Oil Price Trend: Confirmed Downward Momentum
The monthly price decline is unequivocal. WTI crude oil futures fell 1.1% to below $88 per barrel on Friday, May 29, marking the lowest level in roughly six weeks. Over the past month, crude oil's price has fallen 16.47%, though it remains 44.37% higher than a year ago. At 9 a.m. Eastern Time on May 29, Brent oil was priced at $94.44 per barrel, a drop of $3.07 compared with the previous morning.
Trading Economics forecasts oil to trade at 98.72 USD/BBL by the end of Q2 2026, with a 12-month estimate of 114.39 USD/BBL. This suggests potential recovery later in the year, but near-term pressure remains dominant.
LNG Flows as the Leading Indicator for Energy Prices
LNG flows hint at the answer because flexible LNG cargoes now act as the bridge linking regional gas markets, creating structural price correlation between benchmarks like TTF (Europe), JKM (Asia), and Henry Hub (US). In January 2026, TTF and JKM displayed a correlation factor of 0.93, up from just 0.5 in January 2025, demonstrating increasingly intertwined markets.
The TTF vs Henry Hub correlation rose from negative last January to approximately 0.65 in January 2026, partly driven by synchronous weather shocks across the US, Europe, and Asia. This structural linkage means LNG oversupply in one region quickly transmits pressure to others.
### LNG Market Dynamics Driving Oil Price Correlation| Indicator | January 2025 | January 2026 | Change |
|---|---|---|---|
| TTF-JKM Correlation | 0.50 | 0.93 | +86% |
| TTF-Henry Hub Correlation | Negative | 0.65 | Significant Increase |
| US LNG Export Growth (2025) | - | +25% | New Capacity Online |
| US LNG Export Growth (2026 Forecast) | - | +10% | Accelerating Supply |
Data sources: LNG market correlation analysis; US LNG export projections
Global LNG Supply Glut Expected by Late 2026
Massive new supply from the US and China is expected to outpace demand growth by late 2026, creating a global LNG glut that will likely depress spot LNG prices in Asia. US LNG exports are set to rise 25% in 2025 and another 10% in 2026, with the EIA expecting an additional 10% increase in 2026 alone.
Chevron's CEO Mike Wirth told Bloomberg TV this week: "There's a period of time when it would appear we're going to see more supply coming into the market than demand will be able to absorb. That probably results in lower spot prices". This oversupply dynamic mirrors the pressure now visible in oil markets.
- US LNG export projects are expected to start operations in 2026, adding to supply and pressure on prices
- China is signaling weakening demand for both crude oil and liquefied gas, pressuring prices
- LNG demand from China is weaker than imagined, with China buying from Russia instead
- European gas prices and margins are weakening as new US LNG capacity comes online
- If the TTF-Henry Hub spread narrows below $4 per mmBtu, many exporters would dial back production
Key Players Shaping LNG Market Trajectory
Signal Ocean launched its LNG Flows tool in February 2025, providing real-time, data-driven insights into global LNG trade flows that help industry professionals track LNG movements worldwide with precision. The tool aggregates and visualizes LNG shipping data from January 2024 to January 2025, delivering a comprehensive view of the LNG market.
Key features include tracking top origin and destination countries, exploring monthly total LNG export volumes to identify patterns, monitoring vessel movements with detailed breakdowns, and viewing top LNG commercial operators by volume. This analytical capability enables executives to anticipate capacity shifts and optimize trading positions across the natural gas value chain.
- Global Trade Flow Insights: Track top origin and destination countries, along with the busiest LNG ports
- Volume Trends: Explore monthly total LNG export volumes to identify patterns and shifts in supply
- Vessel Movements: Monitor shipments with detailed breakdown of load/discharge dates, ports, and deadweight tonnage
- Commercial Operator Rankings: View top LNG commercial operators by volume for insights into key industry players
- Advanced Filtering: Customize data views by origin country, destination country, vessel size, and date range
Forecast: Will Oil Prices Reverse Course?
Analysts warn that any recovery in Hormuz flows would likely be slow and gradual, as mines would need clearing, damaged infrastructure repaired, and shut-in production restarted, with tanker delays also limiting supply restoration. Rabobank warns markets are still underestimating the scale and duration of the global supply crisis, suggesting oil prices may have eased slightly from recent highs but remain underpriced relative to fundamentals.
Capital Economics states oil prices are likely to rebound to $80 per barrel by year-end, while JPMorgan reaffirmed its forecast for Brent crude to approach close to $90 by 2026, emphasizing the resilience of global demand. However, the coming glut will likely depress spot LNG prices in the latter part of 2026 if Europe hasn't depleted its gas reserves during winter.
Expert answers to Are Oil Prices Going Up Or Down Lng Flows Hint At Answer queries
What drove the May 2026 oil price decline?
The ceasefire optimism triggered the drop. Reports indicate the US and Iran reached a preliminary agreement to extend a ceasefire and ease restrictions on shipping through the Strait of Hormuz, although President Donald Trump has not yet approved the deal. This raised expectations of an eventual end to the US-Israeli war in Iran and reopening of the strait, which would restore supply flows that had been constrained by geopolitical risk.
Are oil prices going up or down in the short term?
Down. Oil prices fell 16.2% in May 2026, with WTI at $87.76/barrel and Brent at $91.70/barrel as of May 29, 2026. Geopolitical de-escalation via the US-Iran ceasefire talks removed the risk premium that had supported higher prices.
Will LNG oversupply affect oil prices in 2026?
Yes. The global LNG glut expected by late 2026 will depress spot prices, and the strengthened correlation between LNG benchmarks and oil means this pressure will transmit across energy markets. US LNG exports rising 25% in 2025 and 10% in 2026 add significant supply.
What is the key indicator for predicting oil price direction?
LNG flows through the Strait of Hormuz and the TTF-JKM correlation factor serve as leading indicators. The 0.93 correlation in January 2026 signals that LNG market dynamics now directly influence oil price movements.
When might oil prices begin to recover?
Trading Economics estimates oil will trade at 114.39 USD/BBL in 12 months (by May 2027), with a Q2 2026 forecast of 98.72 USD/BBL. Recovery depends on whether winter gas reserves in Europe remain high and whether Russian LNG becomes unavailable after the 2027 EU ban.
How does the Trump administration's energy policy affect oil prices?
The Trump administration reopened more than 1.5 million acres in the Coastal Plain of the Arctic National Wildlife Refuge for oil and gas leasing in 2025, reversing Biden-era limits and increasing domestic supply potential. This policy supports higher US shale production, which acts as a soft economic floor for global prices.
