Global Gas Forward Pricing – Review and Analysis

In this note we analyse the story embedded within current forward curves across the three main global gas futures markets (TTF, JKM and HH), how this has evolved over the past year and what the market may potentially be getting wrong. The wave of new LNG capacity, with additions starting in 2025 (but really ramping up in 2026) reflects a key transition period for global gas pricing. In the supply short markets (TTF, JKM) this signals the start of a period of comparatively lower prices. In the US gas market, this reflects the transition to firmer forward pricing, given the requirement to supply new LNG terminals with incremental dry gas production growth. The longer-dated curve in supply short markets has broadly settled around an $8-9/MMBtu floor. We believe the market is under-pricing the loss of Europe’s gas market flexibility and subsequent inability to balance the market through periods of oversupply following the energy crisis. With no substitute for Europe’s flexibility, the market will be more rel iant on demand creation in price sensitive markets to balance. Our key call is that the market is likely too bullish on the capacity for supply short markets to absorb the coming LNG surplus at current forward prices. Instead, it is likely that prices will need to move lower to compete with alternative fuels in price sensitive markets (coal, subsidised LPG) , or even price to curtail marginal US LNG exports through periods of cyclical oversupply.