Global natural gas demand is becoming increasingly bearish, as Europe’s needs are diminished and oversupply is looming, potentially putting the kibosh on U.S. exporters gaining a lot of global share.

The underlying long-term trends for lower gas demand in Europe and elsewhere go beyond the day-to-day politics that were elevated by the UK vote to leave the European Union (EU), according to Raymond James & Associates Inc. Analysts Pavel Molchanov and Jean-Pierre Dmirdjian said a “bit of recovery” was evident last year in European gas demand, but overall, the picture is “glaringly bearish.”

The EU has seen a big drop in gas demand since 2010, in part because of warm winters. Gas also has been squeezed overseas by growth in renewables, particularly wind and solar generation. Meanwhile, cheap coal-fired generation has retained its market share.

Raymond James analysts expect EU gas demand to end this decade “well below” 2010 levels, in contrast to other major economies, where demand is growing.

Liquefied natural gas (LNG) exporters from North America and elsewhere “should not look to the EU as a growth market,” Molchanov said. “Put simply, Europe can get all the gas it could possibly want by pipeline from the North Sea and Russia, at a price below that of any LNG imports.”

The BofA Merrill Lynch Global Research team led by analyst Francisco Blanch said Monday the lack of demand in the EU isn’t the only issue for LNG. Spot LNG prices have decoupled from Brent and may push lower on rising oversupply — even as oil prices continue to recover.

“Despite a 70% run up in oil since February, Asian spot LNG prices are flat over the same period and now trade well below contract prices,” Blanch said. “Because Asian LNG buyers are generally over-contracted and many are currently taking minimum contractual amounts, the ability of crude to pull spot LNG prices higher is much reduced. Put differently, spot LNG prices have decoupled from Brent, and may remain depressed even as oil prices move to $70/bbl by next summer.”

Ironically, said Blanch, the biggest-ever LNG supply wave has yet to hit the market, with Australia and U.S. gas together adding 135 million metric tons a year (mmty) of capacity between 2016 and 2020, which would be a 50% increase in global supply. That amount would dwarf previous supply waves, including a 50 mmty Qatari surge in 2008-2010.

“Buyers in Asia are massively over-contracted with LNG, especially in Japan and Korea, where demand is flat to declining, and even China seems over-contracted for a few years,” Blanch and team said. “New demand may come on the back of low prices in India, Pakistan, Egypt, Jordan or even Saudi Arabia, yet such new demand will likely trail supply to 2020.

“Hence, existing LNG import and generation capacity in Europe may have to soak up the oversupply until demand in the rest of the world can catch up. Coal-to-gas switching in Europe may thus once again have to balance the LNG market at lower prices.”

BofA analysts estimated that Europe could absorb another 40-50 mmty of LNG for power generation if current gas generation capacity is used fully, which would mean European gas prices could drop below average generators’ switching price, now $3.80/MMBtu at current coal prices.

The other possible area of price support could come from U.S. natural gas. Should New York Mercantile Exchange gas prices face continued upward pressure from domestic or export demand, falling EU and Asian gas prices could find some downside support from U.S. gas by closing the arbitrate to slow U.S. export flows, Blanch said.

By 2020, Australia is expected to have added 62 mmty of capacity from 2015 levels, while the United States adds another 73 mmty over the same period. Most is to hit the market between 2017 and 2019.

Sanford C. Bernstein analysts said it may be the end of the road for oil-linked LNG pricing. No “major” LNG plant in the world has been built without a long-term contract in place, but more gas is being sold on spot, noted analyst Neil Beveridge and his team.

In May, Japan’s industrial and energy ministry published the strategy for LNG market development, which may have ramifications for the industry.

“While Japan has been a cozy club of buyers up until now, things are changing,” Beveridge said. “The document is essentially a call to arms for the creation of a global LNG market, which accurately reflected the supply and demand of LNG, citing that the ‘pricing of LNG to crude oil prices is no longer justifiable.’ Given Japan is world’s largest LNG buyer, the industry should take note.”

Three things have come together that could lead to a big change in the way LNG is priced, said the Bernstein team. First, as other analysts noted, LNG oversupply is high and about to get worse.

“Oversupply was a key trigger for pricing reform in Europe,” Beveridge said. “With a surge in new liquefaction supply from Australia and now the U.S. at a time of weakening demand in core North Asian markets, this is a buyers’ market…”

The second factor is exporting LNG from the United States on Henry Hub-linked prices.

“Assuming that U.S. gas prices remain at US$3/MMBtu for the foreseeable future (as many expect), then delivered LNG prices to Asia should be around US$10/MMBtu (including liquefaction and shipping costs), which is the equivalent of US$70/bbl,” the Bernstein analyst said. That means LNG buyers would have a “clear choice” for oil linked- or Henry-linked pricing, or in some instances, a blend.

The third factor driving change is the sense that LNG security is less of a risk. The rise of unconventional gas, combined with slower demand growth in industrialized countries, mean supply anxiety has receded.

“There is a sense that security through long-term LNG contracts is no longer needed,” Beveridge said. “Clearly this sentiment reflects the current state of the market. We suspect this assumption could change when we move back into a sellers’ market, which will inevitably follow in what is an incredibly cyclical industry.”

For now, it’s still a buyers’ market, but launching projects is becoming increasingly painful.

“Only projects at the low end of the cost curve and with well-funded partnerships (which can take pricing risk) will move forward. Over time, however, if buyers push too far, nothing will get built and they could end up back where they started, in deficit and scrambling for contracts.”