Morgan Stanley & Co. LLC has lifted its forecast for key natural gas benchmarks in Asia, North America and Europe amid surging demand, limited supply and low natural gas storage inventories across the world. 

Morgan Stanley analysts led by Devin McDermott said global gas demand continues to “surprise to the upside,” particularly in China. Gas burn has also been boosted by a hot start to summer in the northern hemisphere. 

“This surging consumption comes amidst a backdrop of lingering supply outages,” Morgan Stanley said. “The combination of these factors has continued to tighten the liquefied natural gas (LNG) market even more rapidly than our expectations.” 

LNG demand growth across the world has averaged 3% so far this year, the bank said. But it accelerated...