US LNG profits go negative
Spread compression intensifies, but TTF is primed to snap back | Chart Deck — 12 Dec 2025
The world is waking up to the realities of margin compression. US LNG profits went sub-zero in Europe this week, as transatlantic margins come under sustained pressure.
As ever, the Energy Flux Chart Deck has you well covered: our proprietary analysis of US LNG economics starts on slide 48.
Negative profits won’t lead to shut-ins because US LNG offtakers consider the liquefaction fee a sunk cost, which means cargoes remain profitable on a short-run marginal cost basis (slide 54).
This anomalous situation is unlikely to last long. A large chunk of the margin squeeze arose from the collapse in TTF futures, which are failing to price in above-average storage depletion (slides 39-41).
With a record number of investment funds bidding down the TTF price, it wouldn’t take much more than a cold weather snap to trigger a chaotic bout of short covering (slides 19-21).
Commercial operators are making the most of the price dip, buying up cheap TTF futures at a record rate. Commercial Undertakings extended their net long position to an all-time high of +237 TWh (slide 25).
The TTF Risk Model was upgraded with the addition of a storage tightness Z-score. Since EU gas storage levels are currently below seasonal averages, this is adding to the ‘bullish underpriced’ risk score (slides 30-34). (To compensate, the weighting on the Curve Slope Z-score was dialled down.)
💡 If you want the full picture of how sentiment, economics and cargo flows are lining up as winter begins, it’s all in this jam-packed datavis-heavy Chart Deck:
Highlights (click to expand):
- US LNG profits vanish on long-run cost basis, giving a taste of things to come (slides 48-58)
- US LNG delivered cost in Asia now priced on ~14% Brent parity for Winter 2026 (slides 46-47)
- Commercials go on buying spree, stocking up on cheap TTF futures as hedge funds go all-in short (slides 17-29)
- The TTF Risk Model was upgraded with storage Z-score, exacerbating bullish underpriced risk signal (slides 30-34)
- New seasonal deviation metric for EU gas storage shows stock levels are depleting too fast, too soon (slides 39-41)
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