Why is InCommodities moving into physical US gas trading instead of just financial trading?

Physical trading allows the firm to capture localized basis spreads and physical arbitrage opportunities created by pipeline bottlenecks and regional weather events, which cannot be fully exploited through financial instruments alone. It also positions the firm closer to the actual supply chain of US LNG, which is highly relevant for global energy flows.

How does Goldman Sachs' backing influence this expansion?

Goldman Sachs' institutional backing provides InCommodities with robust financial credibility, access to capital, and potentially favorable credit terms, which are critical when clearing physical transactions and securing pipeline capacity in the highly competitive US market.

What caused the sudden drop in European energy trading profits?

The profit collapse was caused by a dramatic reduction in European gas and electricity price volatility. As Europe's energy supply stabilized with steady LNG inflows and high storage inventories, the extreme price fluctuations of 2022 disappeared, leaving fewer profitable arbitrage opportunities for algorithmic trading models.

OilPrice · June 15, 2026 (Jun 15) · 1 min read

Danish Energy Trader Eyes U.S. Gas Markets After Trading Profits Collapse

Analysis

AI-assisted analysis · reviewed by Yuri Kan

Danish energy trading house InCommodities, backed by Goldman Sachs, is pivotally shifting its strategic focus toward the physical US natural gas market following a dramatic contraction in European energy market volatility. This move highlights a broader industry trend where proprietary traders, having reaped record windfalls during the 2022-2023 European energy crisis, are now forced to seek new geographic frontiers as European spreads compress and margins normalize. By establishing a footprint in the highly liquid US market, the firm aims to leverage its algorithmic trading capabilities in a region characterized by structural supply-demand imbalances and growing LNG export dynamics.

Key Facts

Danish energy trading firm InCommodities is expanding its operations into the physical United States natural gas markets.
The strategic pivot is driven by a sharp decline in fiscal year 2025 pre-tax profits, which fell to €2.95 million ($3.41 million).
Global investment banking giant Goldman Sachs holds a backing stake in the Aarhus-headquartered trading company.
The collapse in profitability is directly attributed to the fading volatility across European power and gas markets compared to the historic highs of previous years.
InCommodities plans to trade physical US gas, moving beyond purely financial instruments to capture physical arbitrage and localized basis spreads.
The expansion targets the highly fragmented and infrastructure-constrained US pipeline network, which offers localized volatility.

Background & Context

Following Russia's invasion of Ukraine in 2022, European energy markets experienced unprecedented price swings, allowing algorithmic and proprietary trading shops like InCommodities to generate record-breaking profits. However, as Europe successfully diversified its gas supplies through increased LNG imports, high storage levels, and demand destruction, market volatility sharply subsided throughout 2023 and 2024. This normalization of energy prices has squeezed trading margins across the continent, forcing European trading houses to look across the Atlantic, where the US shale revolution and expanding LNG export infrastructure present continuous trading opportunities.

Market Impact

This expansion intensifies competition in the US domestic gas trading space, pitting agile European algorithmic traders against established Wall Street banks, domestic utilities, and supermajors. For InCommodities, entering the physical market requires securing pipeline capacity, storage contracts, and transport agreements, which increases operational risk but offers higher margin potential than purely financial trading. The move also reflects a broader structural shift where European trading capital is actively financing and facilitating the flow of US molecules, indirectly supporting the global LNG arbitrage liquidity that ultimately feeds back into European energy security.

What to Watch

Market observers should watch for InCommodities' initial regulatory filings with the US Federal Energy Regulatory Commission (FERC) and their progress in securing physical transport capacity on key interstate pipelines. Additionally, the success of this venture will depend on how quickly the firm can adapt its proprietary algorithmic models to the unique physical constraints and weather-driven dynamics of the North American grid. Over the next 12 to 18 months, the volume of physical gas moved by the firm will serve as a key metric of their successful integration.

Frequently Asked Questions

Why is InCommodities moving into physical US gas trading instead of just financial trading?: Physical trading allows the firm to capture localized basis spreads and physical arbitrage opportunities created by pipeline bottlenecks and regional weather events, which cannot be fully exploited through financial instruments alone. It also positions the firm closer to the actual supply chain of US LNG, which is highly relevant for global energy flows.
How does Goldman Sachs' backing influence this expansion?: Goldman Sachs' institutional backing provides InCommodities with robust financial credibility, access to capital, and potentially favorable credit terms, which are critical when clearing physical transactions and securing pipeline capacity in the highly competitive US market.
What caused the sudden drop in European energy trading profits?: The profit collapse was caused by a dramatic reduction in European gas and electricity price volatility. As Europe's energy supply stabilized with steady LNG inflows and high storage inventories, the extreme price fluctuations of 2022 disappeared, leaving fewer profitable arbitrage opportunities for algorithmic trading models.

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