The bears have been hovering over LNG for a while, quite separately from the prolonged oil glut, panicking as China's LNG demand declined 2% after years of double-digit growth.

This was reflected in Asia spot prices reaching a low of $US6.90/million British thermal units last year.

However, JP Morgan said those with existing contracts, such as Woodside Petroleum's North West Shelf and Pluto projects, Oil Search's PNG LNG and Santos' Gladstone LNG, should be "relatively immune" to the LNG oversupply the bank sees over the next five years.

JP Morgan's November 2015 Asia LNG tour, where it met 28 companies across the LNG supply chain, highlighted a cautious view on demand from Asian buyers with limited appetite to sign new contracts until 2020.

"Additionally, feedback from buyers was the potential for spot LNG prices to de-link with JCC [Japan Crude Cocktail] especially if oil prices increase in CY2016."

ANZ said last week that China's lacklustre energy demand was still the chief likely catalyst for oil prices potentially falling further.

"With China's equity and currencies markets still vulnerable to further sell-offs and little support from market fundamentals, we see further downside to oil prices in the short term," ANZ said.

Yet Adrian Lunt, a commodities analyst at the SGX, said that while oil indexation had a long history in LNG pricing, "it is arguably less appropriate now than ever before".

"While oversupply and macro-driven demand concerns may continue to paint a bleak near-term picture for both commodities, the flaws of linking Asian LNG prices to oil are likely to become more and more apparent over the coming years," Lunt said.

The analyst has identified signs of diverging medium-term outlooks for crude oil and LNG, with some telling medium-term trends emerging in oil markets despite near-term sentiment still clearly negative.

"It is notable, for instance, that over the past six months Brent has been equally correlated with Asian thermal coal as with Henry Hub - though established gas hubs like Henry Hub are of course subject to very different dynamics to the Asian LNG market," Lunt said.

"Indeed, both Brent and Henry Hub price trends have varied quite significantly from Asian LNG spot prices over the past year.

"Diverging market dynamics over the medium-term will likely reveal the increasingly blatant flaws of continuing to link Asian LNG prices to crude oil or western gas hub prices, though the inertia of precedence tends to take time to wane."

Lunt says that such flaws could materialise over time through accentuating LNG supply-demand imbalances and reducing confidence over price formation, as periods of divergence between oil and Asian LNG will place ever-greater strain on long-term contracts.

"Furthemore, the more the matter is ignored now, the greater the disruptions are likely to be in the future," he said.

"In short, the Asian LNG market needs its own market-representative benchmark price."

He said there were clear signs of supply reducing in certain regions, with the US Energy Information Administration forecasting output to drop by about 1MMbpd from its peak last April of 9.61MMbpd.

Non-OPEC supply is expected to decline around 600kbpd this year, which would be its first contraction since 2008.

Global oil demand is still growing, albeit slowly, and investment is plunging, as evidenced by Moody's forecasting a 25% fall in global oil and gas capital expenditure this year.

"LNG, on the other hand, is facing a tsunami of new supply growth and weakening demand," Lunt said.

The 9MMtpa Australian Pacific LNG project shipped its first cargo earlier this month, as annual global LNG production reached 250MMt last year. Chevron's 15.6MMtpa Gorgon project is expected to begin shipments early this year.

US shipments are also expected in the next few months - Cheniere's first cargo from Sabine Pass is expected to be shipped in March after numerous delays.

Meanwhile, demand has been softening after years of strong growth. Wood Mackenzie said Chinese LNG demand dropped 2% last year, while Japanese and South Korean demand declined 4% and 11% respectively.

LNG also faces uncertainty around future competition with thermal coal in Asia.

Wood Mackenzie says the weak demand has translated into lower shipping rates of $US30,000 per day - the lowest since 2010. The potential to optimise US LNG flows also saw 19 new LNG vessels ordered last year.

SGX's recent 2016 Outlook survey revealed significant uncertainty over LNG's ability to compete with thermal coal on cost in the medium-term.

Wood Mackenzie's research director for global gas and LNG supply, Giles Farrer, said the fall in Asian demand and rise in Australian supply meant some Atlantic LNG volumes were squeezed out of the market and Atlantic-to-Pacific trade flows fell 16% last year.

"With the lower oil price driving down Asian LNG prices, the spread between European gas prices and Asian LNG prices narrowed," Farrer said.

"Consequently companies with Atlantic supply were drawn to European markets offering more attractive returns."

Wood Mackenzie's principal analyst for Southeast Asia and Australasia gas and power research, Chong Zhi Xin, said last year's weak market environment forced sellers to look further afield to emerging markets in the Middle East and Africa and new opportunities in Asia, while buyers were more cautious in contracting.

Jordan, Egypt and Pakistan all issued new tenders which were met with intense interest, and the three new entrants imported 5.8MMt last year.