TotalEnergies' second-quarter results took a hit after liquefied natural gas (LNG) trading profit fell by $800 million from the prior quarter. Now Berenberg, a European investment bank, thinks that gas trading could look better in Q3.
Berenberg's read is that Q2's weakness wasn't a sudden collapse in demand for TotalEnergies' LNG, but a trading bet that went the wrong way into quarter-end. Analysts said losses "largely reflected" positioning for higher European gas prices that didn't arrive in time.
Since then, the bank says gas prices have rebounded, which could reduce the drag and help trading results recover in the second half, starting with Q3.
What happened with TotalEnergies' LNG trading?
Liquefied natural gas is natural gas that has been cooled to a liquid state for easier storage and transport. TotalEnergies is one of the world's largest LNG traders, buying and selling cargoes on global markets. Trading profits can swing sharply from quarter to quarter depending on price moves, weather, and supply disruptions.
In Q2, the company's LNG trading desk lost $800 million in profit compared with the previous quarter. Berenberg attributed this to a specific trading strategy: TotalEnergies had positioned itself for a rise in European gas prices, but prices didn't move as expected before the quarter closed.
That kind of timing mismatch is common in commodity trading, where firms take directional bets on price movements. When the bet doesn't pay off within the quarter, it shows up as a profit drop.
Why Berenberg sees a rebound
Berenberg noted that gas prices have since rebounded, which could allow TotalEnergies to recoup some of those losses in Q3. The bank didn't specify exact price levels, but European natural gas benchmarks have been volatile this year amid geopolitical tensions and shifting supply from Russia and Norway.
If the rebound continues, TotalEnergies' trading desk could benefit from more favorable market conditions. The bank also trimmed its 2026-2028 earnings per share (EPS) estimates for the company, reflecting the Q2 hit and a slightly more cautious outlook on long-term LNG margins.
Still, Berenberg maintained its overall view that TotalEnergies' integrated gas and power business remains a key earnings driver over time.
What this means for investors
For everyday investors, this story highlights the volatility inherent in commodity trading. Even a well-run company like TotalEnergies can see big swings in quarterly profit from its trading operations. That doesn't necessarily signal a fundamental problem with the business.
Investors should watch for TotalEnergies' Q3 results later this year to see if the trading recovery materializes. If gas prices stay elevated, the $800 million Q2 drop could prove temporary. If prices fall again, the drag could persist.
The broader energy sector has been sensitive to commodity price moves recently. For context, oil prices slid on news of US-Iran talks, while SLB's strong earnings helped lift energy stocks despite a dip in crude. TotalEnergies' LNG trading adds another layer of complexity for investors tracking the sector.
Berenberg's EPS estimate cuts for 2026-2028 suggest the bank expects slightly lower profitability from TotalEnergies over the medium term, but the Q3 rebound could offset some of that concern. Investors should weigh the trading volatility against the company's diversified portfolio, which includes upstream oil and gas, refining, and renewables.
As always, no single quarter's trading result should drive a buy or sell decision. But understanding how commodity trading affects earnings can help investors interpret quarterly reports and avoid overreacting to temporary swings.
