“One chart to rule them all, one chart to bind them.”
This time last year gas & LNG markets were slumping, with JKM & TTF prices falling through the 10 $/mmbtu level (~35 €/MWh). Weak demand, mild weather and robust European storage inventories were weighing on the market.
Q1 2025 looks very different. A colder winter & the end of Russian gas transit via Ukraine have seen European storage inventories drawing down fast. This is acting to tighten the global gas market supporting prices \t levels about 50% higher than Q1 2024, with forward curves pushing through 15 $/mmbtu (~50 €/MWh).
There is however a common driver across Q1 2024 and 2025: the importance of Asian LNG demand flexibility in clearing the market & setting marginal prices… in 2024 as prices fell, in 2025 as they rise.
Let’s look at 5 charts that frame the market set up into 2025.
1. Forward prices rising, strong curve backwardation
In an increasingly complex global gas market, price action is a powerful ‘north star’. And the price trend over the last 12 months is unequivocally higher as shown in Chart 1.
Chart 1: TTF forward price curve evolution 2024-25
Source: ICE, Spectron
TTF & JKM price rises are being magnified across the front 12 months of the forward curve, increasing backwardation. Large volumes of new LNG supply ramping up in 2026-27 are acting to anchor the back end of the forward curve.
The price rally in H1 2024 was driven by recovering Asian LNG demand, but price rises this winter are focused on stronger European LNG demand.
2. European storage inventories declining
The European winter this year is colder than last. This is causing a significantly more rapid draw down in European storage inventories as shown in Chart 2.
Chart 2: Aggregate European storage inventories (vs 5 yr range)
Source: Timera Energy, GIE
European storage refill mandates mean that the current inventory draw down is strongly supporting injection demand (& prices) across Summer 2025.
This has magnified TTF forward curve backwardation, with the Summer 2025 contract reaching a 5 €/MWh premium to the Winter 2025-26 price. This move has been supported by a mechanism proposed by Germany to reimburse storage capacity holders for negative intrinsic price spread on injecting.
Storage demand is being exacerbated by:
- The halt of Russian gas transit via Ukraine from 1st Jan 2025
- Lower renewable generation levels, supporting gas-fired generation demand.
In combination these factors are supporting European demand for LNG cargoes to balance the market.
3. Prices ramping up relatively inelastic demand curve
When it comes to understanding global gas pricing dynamics there is ‘one chart to rule them all, one chart to bind them’. Chart 3 shows our detailed modelling of European gas & LNG market supply & demand balance & elasticity in 2025.
Chart 3: 2025 LNG & European gas market S&D balance
Source: Timera Global Gas Model
TTF & JKM gas price dynamics are driven by the movement & elasticity (price responsiveness) of the integrated European & LNG market supply & demand curves.
The reason why prices have ramped from 12t o 15 $/mmbtu (40-50 €/MWh) across the last few weeks is a relatively inelastic demand curve pushing up a very inelastic supply curve.
We have detailed quantitative analysis of the drivers behind this move in our quarterly Gas Subscription Service – contact us if you would like a sample copy of our latest report (david.duncan@timera-energy.com).
The key source of demand elasticity that is enabling the market to clear is flexible response across a range of Asian LNG demand sources.
4. Asian LNG demand flex is driving marginal pricing dynamics
Incremental European demand for LNG is met by marginal LNG cargo diversions from Asia to Europe. European prices need to rise enough (relative to Asian prices) to induce this diversion.
Quantifying the price responsiveness (elasticity) of different sources of Asian LNG demand flex is key to understanding absolute & relative price moves in Europe & Asia.
Chart 4 illustrates the responsiveness of Asian LNG demand to JKM price levels.
Chart 4: Year on year changes in Asian LNG imports
Source: Timera Energy, Vortexa
As prices have increased, Asian LNG demand has moderated, with Q4 2024 showing a significant slow down in LNG demand growth on year (with Dec 24 demand actually lower y-o-y).
Recent price response has been led by the two most price sensitive markets at these levels: China (led by industrial fuel switching) & South Asia (led by demand destruction).
5. Price signals reflect European pull on LNG
Further evidence of the importance of Asian flex in balancing the LNG market comes from the spread between Asian LNG prices (JKM) and European gas prices (TTF) that we show in Chart 5.
Chart 5: JKM vs TTF price spread
Source: Timera Energy, CME, ICE
As we describe above, the price rally since Summer 2024 has been led by European demand for incremental LNG.
European prices (TTF) have increased to attract marginal cargoes from Asia. This has resulted in:
- A decline in the premium of JKM over TTF (the key price signal for marginal cargo flow to Asia vs Europe)
- A decline in Asian LNG demand in response to higher prices
Keeping Atlantic LNG supply within the Atlantic basin to send to Europe has also reduced demand for shipping, further lowering the JKM-TTF spread, with freight rates dropping down to ~$9k/day per the Spark30 LNG freight spot assessment.
Increased LNG imports have had the opposite effect on Euro DES LNG – gas hub spreads, with SparkNWE-TTF widening from ~20c/mmbtu to ~40c/mmbtu.
The way forward
After an inflection point in Q1 2024, TTF & JKM prices have continued their trend higher into 2025. This is consistent with our modelling over the last 12 months that shows we remain in a tight market until significant new supply comes online in 2026-27.
As the market tightens, the front of the JKM & TTF forward curves are currently pushing up against stiff resistance around the 15 $/mmbtu level (~50 €/MWh). Below this there looks to be robust price support around the 12 $/mmbtu level (~40 €/MWh).
The relative inelasticity of the aggregate demand curve remains key. This means that relatively small changes in market balance are likely to be magnified in price (both up & down).
This is why when it comes to LNG & gas market pricing there is ‘one chart to rule them all’ (Chart 3 above). And the dynamics behind the aggregate demand curve in that chart are increasingly being dominated by the interaction between a range of sources of Asian LNG demand flexibility.
If you are interested in a sample copy of our Q4 Global Gas Report & Databook, which goes into detail on the state of the market & our future outlook, or further information on the bespoke services we offer, feel free to contact David Duncan (Director, Gas & LNG) david.duncan@timera-energy.com
