LNG (liquified natural gas) from Cheniere Energy (LNG) is one of the U.S. exports most in danger in the newest round of the U.S.-China trade war. Reflective of that the stock was down 3.57%, or $2.42 a share, as of 2 p.m. New York time, to $65.45.
That has taken the stock below support at the 50-day moving average of $66.31 and certainly threatens next support at the 200-day moving average of $64.26. The local low that provides the most support is at $55.30, the level the stock hit during the December 24 marketwide sell off at the end of 2018.What should you do with shares of Cheniere?It largely depends on your time horizon for this investment.
Cheniere is a member of my 50 Best Stocks long-term portfolio. In the long-term LNG exports from Cheniere will continue to grow as the company brings more capacity on line and as the world looks for cheaper ways to reduce carbon emissions from coal and oil. From the long-term perspective, then, I’m doing nothing.
In the shorter term Cheniere is definitely on the frontline in the U.S.-China trade war. China today announced that it would raise the tariff on U.S. LNG to 25% effective June 1. And I think we can assume that prospects for increased sales of Cheniere LNG to China are slim to none.
The good news, sort of, is that U.S. exports of LNG to China already collapsed in March and April with no cargoes from the U.S. being unloaded in China. My math says that you can’t go lower than zero when it comes to LNG shipments.
If you have a short-term perspective I think you should recognize the downside danger to Cheniere’s stock price. Selling now–with an eye on that December low of $55 and change–with the intention of rebuying when the war is over would be a reasonable strategy in my opinion.