European gas prices for delivery in the remainder of the second quarter holding a discount to next winter could encourage firms that already hold capacity to inject, and support the call on LNG deliveries and sendout.
Prompt prices across several European hubs fell below their respective winter 2025-26 contract prices last week, making underground storage injections in April-June economical for firms with booked storage capacity.
The April price expired as the front-month contract on 31 March below the winter 2025-26 contract at several hubs — such as the Dutch TTF, French Peg, German THE and Italian PSV — switched from a premium earlier this year, providing an incentive for injections. The balance-of-April price across these hubs has continued to hold below the winter 2025-26 market. And the May and June contracts at these hubs have also closed this week at a small discount to the winter price. In addition, the TTF forward curve — the European benchmark — encourages capacity holders to inject in the next two months rather than later in the summer, with the third-quarter 2025 contract remaining at a premium to both prices for delivery in the remainder of this quarter and the winter 2025-26 price.
An incentive for injections, albeit limited, could drive up LNG demand from countries with significant storage space and booked capacity for the now-ongoing 2025-26 storage year, such as France. The country has allocated more than 94pc of capacity for 2025-26.
Strong French LNG unloading nominations in May — despite works at Montoir limiting import and regasification capacity — suggest injections could remain brisk next month. There were 29 unloadings nominated across France's four LNG terminals for May — up from 26 actual receipts a year earlier — despite downtime at the 8mn t/yr Montoir terminal scheduled to limit sendout capacity by 15pc on 18 April-9 May, then be completely unavailable on 10-25 May, and be limited by 40pc on 26-28 May. Unloading nominations for April are also high at 38, up from 33 cargoes delivered that month last year.
In contrast, the lack of booked storage capacity in other countries such as Germany and Italy makes it harder to take advantage of slim injection incentives, market participants said. At least 53pc of the German storage space has been sold, and nearly 20pc in Italy. Injection demand in those countries could be limited unless prompt prices fall further below next winter, or the forward curve returns to a more typical shape, with third-quarter contracts at a discount to those for delivery next winter. Injection demand in Germany and Italy made up 26pc and 27pc of total consumption, respectively, in May-September 2022-24.
The diverging pace of injections across those countries in recent weeks, despite similar weather patterns, already suggest differing incentives for injections. Firms injected a net 450 GWh/d on 20 March-2 April in France, while in Germany firms injected a net 2 GWh/d and Italian firms withdrew a net 280 GWh/d over that period.
In any case, weak Asian demand — largely driven by mild weather, healthy underground stocks and weak downstream consumption — might continue to support strong deliveries to European terminals in the coming months. The inter-basin arbitrage for uncommitted US fob supply remains largely shut, with some firms with excess shipping capacity that they view as a sunk cost potentially choosing to send cargoes to Asia rather than Europe.
And while storage capacity holders might also have incentives to inject before rising cooling demand in Asia later in the summer draws LNG supply away from Europe, the sweeping US tariffs announced on 2 April could weigh on Asian industrial demand this summer. European industrial gas use could also be affected by the tariffs, although the 20pc tax on European goods is lower than the one applied to Asian countries. And lower demand from European industries could in turn free up supply for injections.
