Gas and LNG Cal-2025 premiums to 2026 surge in the wake of Trump victory

Premiums for calendar year 2025 gas and LNG contracts versus 2026 contracts and beyond have shot up in the week since the US presidential election, with Donald Trump's victory seemingly injecting more volatility into a market already weighing stronger near-term demand signals, supply security concerns and delays to new liquefaction capacity, against expectations of a "looser balance" in 2026 when those projects do start to come online.

The premium for Cal-2025 contracts for European benchmark TTF gas to Cal-2026 reached a year-to-date high of Eur7.65/MWh on Nov. 11, widening by Eur2.395/MWh since Nov. 4, before easing back slightly to Eur7.22/MWh Nov. 12, according to assessments by Platts, part of S&P Global Commodity Insights.

The premium had been trending higher most of the year, since touching a low of just 85 euro cent/MWh on Feb. 22, but the steep rise over the past week came in the wake of Trump's resounding victory in the US election and as near-term prices rebounded after a report that Azerbaijan, Hungary and Slovakia had agreed on a gas transit deal through Ukraine proved unfounded.

"In Europe, the driving factor really is Trump," one LNG trader said of the widening spreads across calendar years 2025 and 2026.

"There are many uncertainties with Trump; his policies for the future are a mix of bearish and bullish so I think the market is confused about where this will go and is pricing in these uncertainties," the trader added, noting also the potential impact of more US tariffs, particularly on China, as a factor driving uncertainty in the market.

The spread for LNG calendar year contracts has similarly widened with Platts assessing the JKM -- the benchmark for cargoes into Northeast Asia -- Cal-25 contract at a $2.075/MMBtu premium to Cal-26 on Nov. 11, before narrowing back to $1.87/MMBtu Nov. 12.

As with TTF, the premium has generally been on an upwards trend this year with market participants citing delays to upcoming LNG export projects in the Americas, notably Golden Pass in the US as well as LNG Canada and Mexico's Energia Costa Azul, as a key factor driving the widening premium.

ExxonMobil's 18.1 million mt/year Golden Pass facility in Texas had originally been expected to deliver its first cargoes in 2024 but has faced delays following the bankruptcy of a contractor and is now expected to start late in 2025 at the earliest.

The project was expected to loosen a relatively tight global LNG market but with ExxonMobil saying Nov. 1 startup could now slip into 2026, prices in 2025 are expected to face upside risk.

Commodity Insights analysts' latest forecast is for Golden Pass to export 7.70 million mt for the full year 2026 rising to 15.24 million mt in 2027 and 15.39 million mt in 2028.

"Originally, winter 2025 was way [lower than summer 2025] because everyone sees that LNG won't come in until the end of 2025, or Q1 2026. The market is expected to shift from a tight situation in 2025 to loose, even very loose, in 2026," a French gas trader said.

Sources also indicated that the 2025 premium was being driven by a lack of clarity over the future of gas transit between Russia and Ukraine, with the contract set to expire at the end of this year and speculation over a deal to replace it with gas from Azerbaijan, as well as the timings around Qatar's massive LNG expansion project.

"The main thing that will hold the market in Cal 25 is the future of the Qatari [LNG] expansion, once the [talks between Ukraine and Azerbaijan about a gas transit agreement in 2025] are cleared out, it is going to be all about the timing of this expansion," a UK-based trader added.

Qatar plans to build eight new liquefaction trains at the QatarEnergy LNG project at Ras Laffan, increasing the country's LNG export capacity to 142 million mt/year, with the first 32 million mt/year phase under construction and targeting a 2026 commercial startup.

With the expectations for US Golden Pass to enter the market in 2026 and Qatar's expansion, this has driven prices for calendar year 2026 lower. At the same time, uncertainty over supply in 2025 as well as expectations for demand from Asia to grow has kept prices for calendar 2025 elevated.

Market sources also expect strong demand for cargoes from countries such as Brazil and Egypt, with lower hydro reservoirs in the former and dwindling domestic gas production in the latter forcing both to remain competitive in the global market.

Brazil is expected to procure around five cargoes per month during the first quarter of next year and Egypt to tender for around 15 to 20 cargoes for the Q1 2025 period.