In the first week of November 2024, TTF gas futures on the ICE market experienced a significant surge, exceeding €40/MWh on all weekdays. On Monday, November 4, prices rose to €40.30/MWh, marking a 2.9% increase compared to the previous week’s final session. By Wednesday, November 6, the futures reached their weekly low of €43.20/MWh, reflecting a slight decline of 0.3% from the previous day. However, prices quickly rebounded, reaching their peak on Friday, November 8, at €42.41/MWh—2.7% higher than the previous day and the highest settlement price in over a week.
Several factors contributed to the rise in TTF gas futures. Foremost was the threat of supply disruptions from the Gulf of Mexico due to Hurricane Rafael, which raised concerns about potential LNG shortages. Additionally, forecasts for colder weather and reduced wind power generation across Europe in the coming weeks spurred expectations of higher demand for natural gas, particularly in the power sector. Despite Europe’s ample gas reserves, the combination of these factors pushed prices above the €40/MWh mark throughout the week.
Meteorological forecasts for the upcoming ten days indicate temperatures close to seasonal norms, but with colder conditions expected later in the month, further intensifying gas demand. The forecasted drop in wind energy production also plays a crucial role in the increased reliance on gas-fired power generation, particularly during the winter season.
The market’s upward trend was also fueled by geopolitical uncertainty surrounding the U.S. presidential election. Former President Donald Trump’s potential return to office has added another layer of complexity to global energy markets, particularly in terms of U.S. LNG exports. Trump has promised to lift the Biden administration’s pause on new LNG export projects, which could impact global supply and demand dynamics. Energy analysts are cautious in their projections, opting to wait for clearer signs of how U.S. policy changes might influence the market.
Meanwhile, Europe is closely monitoring developments related to the expiration of its gas transit agreement with Russia through Ukraine, which is set to end in December 2024. Russia’s gas flows through Ukraine, which accounted for around 15 billion cubic meters (Bcm) in 2023, primarily supply Hungary, Slovakia, and Austria. However, with Ukraine refusing to extend the transit deal due to ongoing conflicts, there are growing concerns about potential disruptions in gas supply to these countries.
Despite these concerns, Europe has been actively increasing its LNG infrastructure as a safeguard against Russian supply cuts. The expansion of LNG terminals has been accelerated in response to the geopolitical situation and the European Union’s efforts to reduce dependency on Russian gas. This increased capacity should help offset any shortfall if the Ukrainian transit deal does not get renewed.
In conclusion, TTF gas futures in early November were driven by a combination of colder weather forecasts, supply concerns linked to the Gulf of Mexico, and geopolitical factors surrounding the U.S. election and the future of Russian gas flows. With LNG infrastructure in Europe expanding, the market is keeping a close eye on developments that could impact long-term supply and demand.
