In the fourth week of October, TTF gas futures on the ICE market saw a significant upward trend, surpassing €40/MWh. On October 21, prices reached €40.024/MWh, marking a 2.1% increase from the previous week’s final session. This upward trajectory continued, with prices peaking on October 25 at €43.513/MWh—the highest level recorded in 2024 and an increase from the previous Friday. Earlier in the week, on October 24, futures reached €42.154/MWh after a 1.9% daily rise.
European benchmark gas futures rose over 11% during Week 43 compared to Week 42, driven by unexpected supply disruptions in Norway and the US, compounded by concerns about potential gas supply impacts from the ongoing Israel-Hamas conflict. The disruptions began when Equinor, Norway’s state energy company, announced a shutdown of gas production at one of its platforms due to a smoke alert.
Norway has become the EU’s top gas supplier, accounting for about 30% of the bloc’s imports, following a decline in Russian pipeline supplies. Instead, Europe has increasingly turned to seaborne LNG imports, which are now sensitive to geopolitical tensions, particularly in the Strait of Hormuz, through which 20% of global LNG passes. Additionally, Europe faces competition from Asia for limited LNG supplies, necessitating higher prices to attract traders.
The recent mild temperatures in Europe have shifted to winter conditions, raising concerns about increased demand and the potential impact of lower-than-expected wind energy generation. Marginal storage draws in the previous week also contributed to a tighter supply outlook, with storage levels starting the heating season slightly below expected.
As of the latest updates, one-month forward contracts at TTF were trading at €41.600/MWh. Despite being nearly full at 96% capacity ahead of winter, the gas market remains “fragile.” Lower volumes in Ukrainian storage facilities add another 40 TWh shortfall, equivalent to 4% of total EU storage capacity. While this is below last year’s record highs, demand has not dipped as significantly in October compared to 2023.
Price volatility is common at this time of year due to uncertainty about winter demand. While there are concerns, the overall European gas market is not in a materially worse position than last year, despite lower LNG imports and a reduction in total demand. While some forecasts suggest a potentially colder November, last year’s winter demand spikes in November and January did not significantly affect the overall market balance.
