European natural gas prices saw a third consecutive day of increases in the third week of December, as the expiration of a crucial pipeline transit agreement between Russia and Ukraine neared.
TTF gas futures for January 2025 delivery on the ICE market fluctuated during the week but trended upward compared to the previous week, consistently staying above €40/MWh. On Monday, December 16, TTF gas futures reached their weekly low of €40.277/MWh, marking a 10.2% drop from Monday, December 9, and a 2.3% decrease from the previous week’s final session. However, by Friday, December 20, prices surged to their weekly peak of €44.130/MWh, a 2.4% increase from the previous day and 7.1% higher than the previous Friday. The only day prices fell was Wednesday, December 18, with all other days showing gains.
The primary factor driving the price increases was a statement by Ukrainian President Vladimir Zelensky on December 19. He informed Slovak Prime Minister Robert Fico that there would be no Russian gas transit through Ukraine, including through alternative arrangements, such as when gas ownership changes at the Russian-Ukrainian border. This raised concerns about future gas flows to Europe.
Dutch wholesale gas prices initially dropped on Monday, December 16, due to forecasts for milder-than-usual temperatures, which reduced gas demand. Additionally, news on December 13 that Hungary had found a way to pay for Russian gas despite US sanctions on Gazprombank weighed on the market. Analysts observed that the mild weather forecasts and expectations that Europe could get through the heating season without major crises contributed to the bearish sentiment.
The market reversed course on December 19 and 20, as gas demand for power rose, wind speeds decreased, and uncertainty grew regarding Russian gas deliveries following the impending end of the Ukrainian transit deal.
As of the latest update, the one-month forward contract for TTF was trading at €46.025/MWh.
