Recent data shows that lower European gas prices have caused Qatari LNG shipments to shift from Europe to India. Between December 1st and 9th, LNG imports in Europe fell compared to November, partly due to mild weather that helped maintain gas storage levels. Emerging concerns about US supply reliability arise from uncertain winter gas demand. If domestic demand in the US is higher than expected, it could lower the volume available for export and lead to rising US gas prices during cold snaps.

Fall in Gas Prices

In mid-December, gas prices dropped due to milder weather. However, demand is expected to rise in the medium term because data centers will consume more electricity. The International Energy Agency highlighted this increase in its earlier forecasts for US electricity usage. Low gas prices in Europe are prompting Qatari LNG cargoes to move to more profitable markets like India. Gas storage in the EU remains high at 92% capacity this week, reported by Gas Infrastructure Europe, well above the five-year average. This situation has kept the market stable as the holiday season approaches. This stability may present an opportunity. The market seems to underestimate the risk of a sudden cold spell. Major weather models predict a significant temperature drop across Northwest Europe in the last week of December. Buying out-of-the-money call options on January or February 2026 TTF futures could be a cost-effective strategy to prepare for a price surge if heating demand increases.

Risks to US Supply

We should also consider risks to US supply, which may be less reliable than expected. Recent EIA data shows a 5% decrease in LNG export volumes from main Gulf Coast terminals compared to the November average. This indicates that any rise in US domestic demand could quickly reduce the gas available for Europe. This concern ties into a long-term trend of increasing US electricity consumption, a pattern that gained traction when utilities updated demand forecasts in 2023 due to data center expansion. With recent drops in US gas prices due to mild weather, this might be a good time to buy long positions on Henry Hub futures. This move bets that domestic heating and power needs will tighten the market as winter progresses. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now