Natural gas prices at the Title Transfer Facility (TTF), Europe’s most liquid gas trading hub, have eased this week as expectations rise for a potential Ukraine peace deal. Analysts suggest that Ukrainian transit remains the most viable option for increasing Russian pipeline flows to Europe. As a result, TTF front-month prices dropped by 14.6% week-on-week.
TTF price movements in February 2025
During the third week of February 2025, TTF gas futures for March delivery trended downward, staying below the €50/MWh mark throughout the week.
- Tuesday, February 18: Prices peaked at €49.215/MWh, a 2.2% increase from the previous day but 14.8% lower than on February 11.
- Friday, February 21: Prices dropped to a weekly low of €47.195/MWh, 0.6% lower than the previous day and 6.9% lower than February 14.
- Weekly average: Prices settled at €48.061/MWh, marking a 12.2% decline compared to Week 07.
As of the latest market update, the one-month forward contract at TTF is trading at €43.150/MWh, reflecting continued downward pressure.
Factors influencing market trends
Several factors are contributing to the easing of gas prices:
- Milder weather forecasts: Temperatures in northwestern Europe are expected to rise above seasonal norms, reducing heating demand.
- EU discussions on storage targets: The European Commission is working with member states to introduce more flexible gas storage requirements, alleviating concerns about supply shortages.
- High LNG imports: Liquefied natural gas (LNG) deliveries to Europe have surged, slowing the depletion of reserves. Analysts estimate LNG imports could increase by over one-third this summer, bringing an additional 250 LNG shipments to European terminals.
- Storage levels & rebuilding efforts:
- EU gas storage is 42.6% full, according to Gas Infrastructure Europe.
- Stronger storage injections are expected this summer, potentially reaching their second-highest level in the past five years.
Supply outlook for summer 2025
Despite falling prices, the European gas market faces key supply challenges:
- Lower pipeline imports:
- Russian gas transit via Ukraine is set to decline by 8 bcm.
- Norwegian gas output is expected to fall by 3 bcm.
- Increased supply via TurkStream and North Africa will be insufficient to fully compensate for these losses.
- Stronger EU exports to Ukraine:
- Ukrainian storage levels have dropped to historically low levels, increasing injection demand by at least 3 bcm this summer.
- Recent Russian attacks have damaged Ukrainian upstream production sites, which could further reduce domestic output.
Conclusion
While European gas prices are currently declining, the market remains volatile due to geopolitical uncertainties and supply shifts. Strong LNG imports are expected to support European storage replenishment, but reduced Russian and Norwegian pipeline flows, combined with higher exports to Ukraine, could drive up LNG demand in the coming months.
