In the second week of December 2024, TTF gas futures at ICE experienced a decline compared to the previous week, although prices remained above €40/MWh throughout. On December 10th, TTF gas futures hit their weekly peak at €45.552/MWh, marking a 1.6% increase from December 9th, but still 2.0% lower than the previous week’s final session. By December 13th, prices had fallen to their weekly low of €41.215/MWh, which was a 3.7% decrease from the prior day and 11.3% lower than the previous Friday. Prices continued their downward trend throughout the week, with the sharpest drop observed on Thursday, December 12th, when a 4.2% fall was recorded.
A key factor weighing on prices was the ongoing discussions about maintaining Russian gas transit through Ukraine beyond the current contract’s expiration on December 31, 2024. Gas buyers in Slovakia and Hungary were in talks to ensure continued gas flow, while demand for pipeline capacity through Bulgaria and Türkiye for January 2024 also increased, suggesting preparations for potential disruptions if Russian gas flows halt as planned.
Weather forecasts indicating milder temperatures across northwest Europe in the coming week provided some relief, as the region had been facing sharp withdrawals from gas inventories. Additionally, LNG imports had risen recently, contributing to securing enough fuel to meet heating demand, which should help ease supply concerns.
As of the latest update, the one-month forward contract for TTF was trading at €42.065/MWh. Despite the looming expiration of the gas transit deal, the European Commission assessed that the end of Russian natural gas flows through Ukraine would have a “negligible” impact on European prices. This assessment was based on the fact that European markets had already priced in the cessation of gas transit, and alternative supplies would be available to mitigate any disruption.
The Commission’s report, cited by Bloomberg News, noted that with over 500 billion cubic meters of LNG produced globally each year, replacing the 14 billion cubic meters of Russian gas transiting via Ukraine would have minimal impact on EU gas prices. The report also highlighted that member states had reduced gas demand by 18% since August 2022, compared to the five-year average, further strengthening the EU’s resilience.
Despite ongoing negotiations between gas buyers in Slovakia and Hungary to maintain gas supplies, the European Commission emphasized the limited market impact of the recent disruptions, such as the halt of supplies to Austria’s OMV AG. Additionally, the U.S. is set to increase LNG capacities in the next two years, further supporting the EU’s ability to cope with any future gas supply challenges.
