In Week 42 of 2024, European TTF gas prices experienced significant fluctuations due to escalating tensions in the Middle East, which added volatility to the market.
On Monday, October 14, TTF gas futures on the ICE market peaked at €40.559/MWh, marking a 1.7% increase from the last session of the previous week. However, prices continued to oscillate throughout the week, reaching a weekly low of €38.34/MWh on Friday, October 18. Earlier in the week, on Thursday, October 17, futures rose by 1.0% to settle at €39.65/MWh, the third highest price recorded in 2024. By Friday, the settlement price slightly rebounded to €39.88/MWh, representing a 2.7% decrease from the previous Friday but a 0.5% increase compared to the prior week.
The downward trend in prices was influenced by high levels of LNG supply and forecasts of mild temperatures, which were expected to reduce demand. As Europe braces for winter amid uncertainties regarding remaining Russian gas flows, LNG imports have been rising, contributing to the overall stability of supply. However, disruptions such as Norwegian outages and lower wind energy forecasts have occasionally pushed prices up.
Geopolitical tensions have been a key factor in the market’s volatility, particularly concerns regarding the Strait of Hormuz, a crucial shipping lane for LNG and oil. Following a drone attack near Israeli Prime Minister Benjamin Netanyahu’s residence, Israel launched a military response against Hezbollah in Lebanon. The ongoing situation raises worries about potential disruptions to fuel supplies as the heating season begins in Europe.
Market analysts suggest that the Dutch gas prices are likely to remain in the €39-40/MWh range until there is clarity regarding the geopolitical landscape. A cold snap is anticipated at the end of the month, which could test the region’s energy infrastructure and storage capacities. Major cities like London, Paris, and Berlin are expected to see temperatures drop below seasonal averages.
Despite these challenges, Europe appears to be well supplied, with an increase in LNG deliveries and a rebound in pipeline flows from Norway. As of the latest updates, the one-month forward contract at TTF was trading at €40.970/MWh.
In addition, LNG imports at northwest Europe’s terminals have surged to their highest levels since April, driven by heightened concerns over supply following renewed Middle Eastern tensions. This surge in imports has led to several cargoes being redirected from Asia to Europe, which may alleviate supply concerns but could also lead to increased competition for LNG, raising prices in both European and Asian markets.
Currently, Europe’s gas storage is at 95% capacity, but this level may not suffice for winter needs. The volumes in storage are slightly lower than the previous year, largely due to a reduction in incoming LNG shipments. With more cargoes now en route to Europe, supply concerns may begin to ease, although seasonal demand and competition for LNG are likely to drive prices higher.
Additionally, supply worries loom over the potential expiration of the Ukraine-Russia gas transit agreement, which is set to end on December 31, 2024.
