On Monday, September 23, European natural gas prices increased as geopolitical tensions in the Middle East and Ukraine escalated, coupled with forecasts of a colder snap ahead of the winter heating season. The November TTF contract closed 3.5% higher than the previous week’s final session, reaching €36.979/MWh.
The situation in the Middle East intensified as Israel conducted another wave of airstrikes against Hezbollah in southern Lebanon, raising concerns over a potential broader conflict that could disrupt global gas supplies. Ukrainian officials also warned of possible Russian strikes on nuclear power sites, while fighting persisted in the Kursk region near the Sudzha gas transit point.
In the Middle East, the escalating tensions between Israel and Hezbollah threaten offshore natural gas fields that supply gas to Israel, Egypt, and Jordan. Additionally, extended maintenance work at Norway’s Skarv and Sleipner facilities is expected to reduce Norwegian gas supply to Europe in the coming days. Weather forecasts indicate lower-than-usual temperatures in parts of Europe by the end of the week, which could increase demand for heating and power generation.
Natural gas futures continued to climb on Wednesday, reaching €37.878/MWh due to colder weather forecasts that are expected to drive heating demand. Market participants are also closely monitoring geopolitical developments in Ukraine and the Middle East, as well as weather conditions in the Gulf of Mexico, where Tropical Storm Helene strengthened into a hurricane and impacted the Florida Panhandle.
As of September 29, 2024, European gas storage levels stood at 1,080.5311 TWh, equivalent to a filling level of 94.3%, according to data from Gas Infrastructure Europe. This provides some assurance regarding supply for the upcoming winter heating season. However, the market may face some challenges before winter begins, particularly following a few days of net withdrawals during a recent cold snap.
Storage additions have slowed considerably in September, averaging only 0.072% per day, raising concerns about Europe’s ability to achieve 100% filling levels by October. This slowdown is primarily attributed to scheduled annual maintenance in Norway. On September 26, Norwegian flow nominations increased to 267.3 Mcm/day, a 21.8% rise from the 219.4 Mcm/day recorded on September 19.
According to the European Gas Hub, Europe achieved a significant milestone in September, as yearly apparent gas demand fell below levels equivalent to a 20% decrease from 2021 for the first time. This trend of steady demand decline has been ongoing since then.
