The global gas glut will soon vanish because of rising opposition to nuclear power in the aftermath of Fukushima crisis and a dearth of new supply, according to analysts at Bank of America Merrill Lynch (BoAML).

The International Energy Agency forecast late last year that global gas supply capacity was set to rise above 200 billion cubic metres (bcm) in 2011 and that capacity should exceed demand for a decade.

But the shutdown of some Japanese nuclear power plants after Fukushima has turned the global gas market around, with supplies looking like getting much scarcer sooner.

"The global LNG market is tightening rapidly. In our view, the global gas glut is set to disappear quickly," the investment bank said in a research note.

"Rising Japanese LNG demand is accelerating a progressive market tightening that had already been ongoing due to the strength in emerging market demand growth."

BoAML expects Japan's imports of liquefied natural gas for 2011 to rise 8.5 million tonnes above the 70 million tonnes it consumed last year, mopping up large quantities of LNG at a time when new big consumers like India are snapping up supplies that might have swelled European supplies.

"Although the market is well supplied now, we worry that supply could become a constraining factor on demand from 2012 as there are no major supply additions until 2015."

In the second half of the decade new export projects in Australia and the United States could improve global supplies, it said.

Despite higher prices on offer for LNG sellers in Asia, the bank still expects Europe to be comfortably supplied with gas this summer, with rising Russian pipeline gas exports and limited diversions of LNG tankers east helping keep up supply.

"We believe these diversions are not impactful enough to create a shortage of gas in Europe," the bank said.

"North west Europe is receiving strong inflows of LNG despite the step-level change in Japan's buying... We find it hard to foresee a big scarcity of gas in Europe this summer."

Investment bank Goldman Sachs sparked a rally in UK gas prices in April when it said prices were likely to rise significantly over the next two years because of reduced supply and Japan's growing gas appetite, while rival investment bank Barclay's Capital said in mid May it also expected global supply of LNG to tighten by the end of 2011.

But other analysts say there should be plenty of gas available, with Russia able to increase pipeline gas supplies to Europe.

Oil-indexed Russian gas is relatively expensive, hoever, because of a surge in crude prices over the last few months.-Reuters