Benchmark European natural gas contracts (TRNLTTFMc1) hit two-year highs on Tuesday, but have been since edging lower.

And MUFG commodities analysts in Thursday note offer three reasons why prices could enter a more protracted decline from here. If they’re right, it’d be good news for European gas-sensitive stocks like chemicals, as well as European government bonds via lower inflation.

The reasons are:
– U.S. President Donald Trump has lifted the Biden administration’s pause on new Department of Energy permits for LNG export facilities– which paves the way for the development of new shipment hubs.

– China has instituted tariffs on US energy imports.
– The reports that Trump will introduce a plan to reach a peace agreement for Ukraine that may lead to higher flows of Russian natural gas flows through Ukraine to Europe via pipeline.

“All in, these three forces, alongside the mega-wave of LNG supply that is set to hit markets from 2026 onwards from projects already under construction, strengthen our delayed (not derailed) bearish natural gas view,” say MUFG.

“We hold conviction that this will cause significant downside pressure to TTF prices to the ~EUR20s/MWh levels in 2026.”

The benchmark front-month TTF hub contract (TRNLTTFMc1) was last down 6.7% on the day at 52.3 euros per megawatt hour (MWh).
Source: Reuters (Alun John)