US gas futures briefly rose above $7/MMBtu during Winter Storm Fern, then dropped below $3/MMBtu. Storage levels stayed close to the ten-year average. Lower carbon prices reduce the cost of coal power generation. As a result, the same amount of gas-to-coal switching can happen at a lower gas price. This points to lower European gas prices in the near term.

Global Lng Supply Outlook

Global LNG supply is expected to grow, which could create a period of oversupply. That could push European gas prices lower until global supply and demand rebalance. It may also include a temporary closure of the US LNG export arbitrage. US, European, and Asian (JKM) gas benchmarks tend to follow similar seasonal demand patterns, such as winter heating and summer cooling. This supports continued long-term price correlation across these regions. Based on forward curves dated 14 February 2026, LNG export profitability is expected to fade to near zero by 2027 under current forward prices, exchange rates, and arbitrage costs. This outcome was also forecast in 2023, with arbitrage closure repeatedly projected on a similar timeline. US natural gas futures have fallen back below $3/MMBtu after a brief winter spike. This fits with current market fundamentals. The latest Energy Information Administration (EIA) report shows working gas in storage at 2,150 Bcf, which is in line with the five-year average for mid-February. With supply comfortable, any weather-driven rallies are likely to be short-lived and may offer selling opportunities.

European Gas Price Drivers

The outlook for European gas prices appears weaker. It is being weighed down by both rising global LNG supply and lower carbon prices. With European Union Allowances (EUAs) near €45 per tonne—well below the highs seen in prior years—coal-fired generation becomes more competitive. This can reduce gas demand from the power sector and limit how far TTF prices can rise. More LNG supply is also strengthening the link between US, European, and Asian gas markets. Price correlations between Henry Hub, TTF, and JKM are likely to increase, especially as new export capacity—such as Qatar’s North Field East—starts up later this year. Traders should watch inter-basin spreads, since the extreme price gaps seen in 2022 look less likely to persist. Forward curves suggest the arbitrage to ship US LNG to Europe could effectively close by 2027. If that happens, longer-dated European gas contracts may be priced too high relative to US contracts. One way to express this view is to take bearish positions in calendar 2027 TTF futures or to sell call options in that tenor, aiming to benefit from expected price convergence. Overall, this points to a market with structurally lower volatility in the years ahead. As LNG flows help balance regional markets more smoothly, sharp price swings may become less common. This environment can favor strategies designed for range-bound pricing or falling implied volatility, such as selling strangles or using calendar spreads. Create your live VT Markets account and start trading now.

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