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The second quarter of the year is, historically, the weakest quarter for global demand for natural gas.

That’s not a good forecast since the global glut of natural gas has already gotten so large that U.S. exporters of liquified natural gas have no place to send it. LNG demand from China has slumped thanks to the U.S.-China trade war and slowing growth in the Chinese economy. European gas storage is almost full. Tankers are cruising around the world’s oceans in the hope of finding some market somewhere that will buy their cargoes.

It’s likely, recent reports from both Citigroup and Morgan Stanley say, that exporters will have to curb shipments by as much as 2.7 billion cubic feet a day in the second or third quarter, assuming normal weather. The estimated 2.7 billion cubic feet curtailment is about half of the current daily volume of exports.

I don’t think this is a problem with a short-term fix, either. Which is why I’m selling Cheniere Energy (LNG) out of my long-term 50 Stocks Portfolio as of tomorrow, Wednesday, November 27. The shares are up 113.84% since I added them to the portfolio on May 3, 2013.

However, the shares are up only 3.65% in 2019 to date as of the close on November 25 and they’re down 4.59% in the last month.

Here’s the dynamic that puts natural gas producers and exporters between a rock and a hard place.

Natural gas production from wells in U.S. oil shale geologies just isn’t very price sensitive right now.

Natural gas production from wells in oil-rich shale basins like the Permian is largely linked to oil production. If you drill for oil and then produce oil, you get natural gas too. And right now, despite low oil prices, oil shale producers have a lot of incentive to keep producing and even drilling. Smaller financially stretched producers need to keep producing oil–and therefore natural gas–because they need revenue to support their debt loads. Majors such as Exxon Mobil (XOM) that have committed huge amounts of cash to buy into oil shale production have been counting on growing production from U.S. oil shale operations to offset stagnant production growth elsewhere in the world as a result of cuts to capital budgets for things like deep water drilling. All of which means that oil production from U.S. oil shale producers is likely to keep growing even with low oil prices. And that natural gas production will also continue to grow even though companies exporting liquified natural gas face horrendously low prices and a scarcity of markets willing to buy LNG.

The chain that leads from cancellations by customers to shut ins at LNG exporters is still in its early stages. Customers such as trading houses that resell LNG can refuse to load cargoes because prices are to low to yield a profit after shopping costs. Customers of U.S LNG export terminals have to pay to reserve supplies of LNG under the terms of many long-term contracts but they can opt out of buying with 30 to 60 days notice. Contracts from other suppliers such as Qatar and Australia are more likely to be traditional take or pay contracts that require buyers to pay for a fixed amount of LNG whether they need it or not.

Markets are just staring to see a few isolated cancellations.  This month Singapore’s Pavilion Energy cancelled the loading of an LNG cargo from the United States. The company says that the cancellation was a result of logistics and not low prices for natural gas. So far other buyers of U.S. LNG have continued to load contracts.

Part of the reason for so few cancellations to date is the unpredictability of weather and especially temperatures. No LNG supplier wants to be caught short if the weather turns colder than usual. A mild winter, on the other hand, would lead to even larger surpluses but no one knows if temperatures will be milder than normal.

I don’t either, of course, but to me right now the risks seem heavily weighted to the downside.