LNG

The arbitrage for flexible US LNG cargoes heading to Asia is open with spreads between the Japan Korea Marker (JKM) and the Dutch TTF widening, as the tepid recovery of Qatari and UAE LNG exports is unlikely to outpace rebounding Asian demand.

Bullishness abounds for LNG prices and winter 2026/27 contracts at Europe’s benchmark TTF gas trading hub after US President Donald Trump threatened to impose a US toll on shipments through the Strait of Hormuz. For spot prices, the sell-off after the peace memorandum was short-lived.

QatarEnergies is working towards restarting some LNG trains at Ras Laffan, as shipping disruptions are anticipated to ease by the end of April. If the Strait of Hormuz remains closed until July or beyond, however, analysts reckon prices at the Dutch TTF gas trading hub would need to rise to well above 2022-levels for Europe be able to refill storages.

Prompt prices at the Dutch TTF gas trading hub are rising on mounting risk that US strikes Iran – now seen as “more likely than not” – could threaten LNG trade flows via the Strait of Hormuz. Approximately 7.1 million tons per month of LNG from Qatar and the UAE currently transits the Strait of Hormuz, or one-fifth of global LNG trade.

Energy Aspects remains bearish against JKM–TTF Q1 26 spreads amid dwindling freight rates. Some recent fixtures for two-stroke LNG vessels in the Atlantic basin fell below $100,000 per day, opening the arbitrage for US LNG heading to markets east of Suez via the Cape of Good Hope.

Many US gas producers are hedging their output, as a cold winter combined with soaring LNG feedgas demand could drive the Jan-26 contract above $5.00/MMBtu. The Henry Hub Cal-26 strip could - under these conditions - jump above $4.25/MMBtu, Energy Aspects forecasts.

Risks abound that some US LNG export capacity will be shut in starting from 2029. If Asia cannot absorb the excess supply by adding import capacity through FSRUs, and there are successive mild winters, analysts reckon the global market will need US shut-ins to balance.

Technical factors support upward momentum for Henry Hub gas prices, especially for the winter 2025/26 strip. Energy Aspects’ quant analysts team sees open interest (OI) erosion in the near-term contracts which creates opportunity for new risk to be added along the curve.

Heatwaves in the eastern part of the U.S. have sent Henry Hub futures soaring as gas-burn stays high at 49.3 bcf/d through July 25, while financial flow risk is skewed to the upside, Energy Aspects finds.

Analysts have revised down Asian gas demand by 1.7 million tons after Chinese LNG imports fell 0.9 mt in a flatlining economy. The revision follows a 2.7 mt demand downgrade at the start of the US-China tariff war which impacts purchasing power and reduced LNG demand to 3.6 mt year-to-date.