European LNG, gas supply shifts strengthen 2026 summer-winter backwardation

European natural gas prices for summer 2026 have held their backwardation against their winter 2026 counterpart as sources emphasized improving global supply-demand dynamics later that year.

Platts, part of S&P Global Commodity Insights, assessed the Dutch TTF summer 2026 contract at Eur34.485/MWh on Nov. 25, while the winter 2026 contract was assessed at Eur34.22/MWh.

This 26.50 euro cent/MWh spread is the widest the summer 2026 premium has been for 22 months, having first flipped into backwardation on Nov. 11.

In comparison, the summer-winter 2026 spread was at a Eur1.50/MWh contango this time last year.

Traders attributed the backwardation between the summer-winter contracts to uncertainty over summer 2026's injection season, coupled with more supply entering the market later that year.

According to data from Commodity Insights, global LNG supply is expected to grow from around 452 million mt for all of 2025 to nearly 494 million mt in 2026.

Indeed over 2026 global LNG supply is set to rise from 121 million mt in the first quarter to reach 132 million mt by the fourth quarter as new supply pathways enter the market over the winter and into 2027, Commodity Insights data showed.

While the global LNG market was expected to remain relatively tight until new liquefaction capacity came online in 2025, delays in global LNG export capacity mean that market participants now see prices and supply easing from winter 2026 onwards.

"Most of these delayed projects will come online in winter 2026," a second trader said. "Seems the market sees summer 2026 is too bullish to me though."

While several projects are expected to be completed over this winter period, traders have in particular highlighted expansions to US and Qatari export capacities given the role of both countries as key hubs for satiating appetite for the super-chilled fuel.

Supply projects for winter 2026

Of the current 370.16 million mt currently being imported in the global LNG market, the US and Qatar accounted for around 21% and 19%, respectively, of the supply, Commodity Insights data showed.

In the US, while delays to the 18 million mt Golden Pass LNG project meant both traders and Commodity Insights data expected first volumes to be exported in the first quarter of 2026, most of the expected supply increase will arrive later that year with total US supply set to grow nearly 20% from the third quarter of 2026 to nearly 36 million mt in the fourth quarter.

Traders see the startup of Golden Pass impacting the spreads between the first and second quarters in 2026.

Platts assessed the TTF Q1-2026 contract at Eur40.825/MWh versus the Q2-2026 contract assessment of Eur34.895/MWh on Nov. 25.

This spread of Eur5.93/MWh was substantially narrower than the Eur8.07/MWh spread seen Nov. 24, 2023, between the respective first quarter of 2025 and second quarter of 2026 contracts at the TTF.

Increasing capacity from Plaquemines, Golden Pass, Corpus Christi and Freeport LNG will also help feed the expected supply growth in winter. Notably, the largest increase (around 16% from the third quarter to the fourth quarter of 2026) comes from Sabine Pass LNG's capacity.

In Qatar, the country's North Field East expansion is set to help further loosen the global LNG market with around 32 million mt/year of capacity for 2026 and a further 16 million mt capacity from North Field South for 2027.

QatarEnergy recently announced it expects around 127 million mt/year planned for 2027. This would be an increase from the nearly 88 million mt expected for 2026, Commodity Insights data showed.

Commodity Insights data shows that the biggest increases in supply from Qatar for 2026 will arrive in the fourth quarter of 2026. Qatar's LNG supply will increase from around 21.86 million mt in the third quarter to nearly 36 million mt for the fourth quarter before continually increasing each quarter to a peak of 29.71 million mt in the third quarter of 2027.

"It's similar to 2025 in the sense that there's uncertainty over the summer [2026] injection season but then you'll have more supply in winter [of that year]," an LNG trader said.

Traders added that the increase in supply may impact the global LNG shipping market atop the physical cargo market.

New supply may not absorb shipping length

Market participants expect the new liquefaction capacity to help absorb some of the shipping length within the market. However, given the current number of newbuilds entering the market outpacing the global demand for LNG, shipping rates have been depressed in the prompt and shipping sources expect this trend to continue until at least 2027.

"For me personally, we will see the real change only from 2027," a shipbroker said. "2026 I believe will still be long in shipping."

"Energy demand is growing and not going down, so those volumes should go to Europe," another market participant mentioned. "Beside that, there will be 900-1,000 ships till then, so I think until 2027-2028 market will be low and too many ships for the actual LNG demand."

In the Atlantic Basin, two-stroke ships stood at $15,000/day on Nov. 25, compared with $197,500/day on Nov. 24, 2023. In the Pacific Basin, two-stroke ships fell to $22,000/day from $197,500/day on Nov. 24, 2023.

"I think not so much impact shipping length, as new supply comes there are a number of new buildings and redeliveries coming into the market against it," a market participant said. "More so, between now and then some ships will get scrapped and the new EU ETS will limit the viability of old steamers, so rates might be firmer but not expecting any drastic change at 2026."

Although uncertainty still surrounds the shipping market, traders suggested that the new wave of supply should help to ease spot prices and bring spot prices closer to contractual levels.

For now, spot prices remain elevated with Platts assessing the DES Northwest European marker for January at $14.648/MMBtu on Nov. 25, above the $11.128/MMBtu seen from this time last year.

At the same time, the Platts Gulf Coast Marker for US FOB cargoes loading 30-60 days forward was assessed at $14.19/MMBtu on Nov. 25, above the $11.79/MMBtu seen last year.