European gas storage sits at about 70% full heading into winter, down from 82% a year earlier and a 10-year average of 87%, as the global LNG market enters the heating season with a thin supply cushion.

Morgan Stanley raised its fourth-quarter JKM forecast to $27.50/MMbtu from $25/MMbtu, citing a slower Qatari restart and continued winter upside risk. New liquefaction capacity and higher utilization outside Qatar and the UAE have offset about 60% of Middle East LNG supply losses since March, the bank's analysis found. Weaker demand outside Europe and European storage withdrawals covered the remainder, but left inventories unusually low for the season.

Where are US cargoes heading?

Europe is drawing more flexible US supply. About 57% of US LNG exports were headed to Europe in September, up from 53% in August. US feedgas rose about 6% month over month as Freeport recovered from an outage.

Strong European pull is supporting vessel demand, but shorter Atlantic voyages and rapid fleet growth are more than offsetting that pressure on freight rates.

• Atlantic spot rates for modern two-stroke LNG carriers: about $25,750/day on Oct. 6
• Pacific spot rates: about $39,000/day (Spark Commodities data)
• About 55 new LNG carriers delivered in the first 7 months of 2026, with more expected by yearend

Morgan Stanley noted that Asia LNG carrier rates have fallen about 80% from early-March highs and returned near pre-conflict levels, although route costs remain above levels immediately before the conflict.

Is China returning to US long-term contracting?

China is adding another layer to the market outlook. The Iran war has disrupted global natural gas shipments, prompting China to seek to diversify its sources of supply.

The context: China imposed a 15% tariff on US LNG in February 2025 in retaliation for US President Donald Trump's tariffs on Chinese goods, and Chinese purchases of US LNG stopped in March 2025.

Venture Global is in early-stage talks with at least three Chinese LNG buyers, including PetroChina, over potential long-term purchases from its Louisiana projects, according to Bloomberg. PetroChina's potential volume would exceed 1 million tpy. The talks follow China Gas Holdings' September agreement to buy 0.5 million tpy from Venture Global for 20 years beginning in 2030.

Near-term Chinese demand remains weak, however. China's LNG imports are around 7% lower year to date, reflecting ample pipeline gas, weak downstream consumption, and competitive domestic pricing.

What comes next on supply?

Morgan Stanley expects more than 30 million tpy of non-Middle East liquefaction capacity to start by end-2027, before additional volumes arrive from Qatar's North Field expansion. That pipeline sets the timeline for any loosening of a market now entering winter with minimal slack.

The watch items: European storage draw rates through the heating season, the pace of the Qatari restart, and whether the Venture Global–PetroChina talks convert into a signed sale-and-purchase agreement.