In the final week of October 2024, TTF (Title Transfer Facility) gas futures on the ICE market remained relatively stable, trading at similar levels to the previous week. Prices surpassed €40/MWh for most of the weekdays, except on Friday, November 1, when they dipped slightly to €39.18/MWh. On Monday, October 28, TTF futures settled at €42.52/MWh, marking a 2.3% decrease compared to the previous Friday’s close. Prices continued to fluctuate throughout the week, reaching their highest level on Tuesday, October 29, when they hit €43.20/MWh, a 1.6% rise from the previous day. Afterward, prices began to decline, and by Friday, November 1, the weekly low of €39.18/MWh was recorded, which was 10% lower than the previous week’s Friday settlement and the lowest level since October 10.
Price movements and key drivers
The fluctuations in TTF prices during the last week of October were influenced by a combination of factors:
- Norwegian Supply Disruption: On Tuesday, October 29, prices spiked when Norway’s state-owned Equinor announced it was suspending production at one of its major platforms due to a smoke alert. Norway, which currently supplies around 30% of the European Union’s gas, is a key player in Europe’s gas supply, so any disruption, even if temporary, tends to impact prices. Although Equinor assured that the suspension wouldn’t affect its export commitments, the announcement caused a brief price surge.
- Azerbaijan supply deal and Russian gas transit: On Friday, November 1, gas prices retreated below €40/MWh following reports that European buyers were nearing a deal with Azerbaijan for additional gas supplies. This potential deal is significant as it could offset the expected reduction in Russian gas deliveries when the current transit agreement for Russian gas through Ukraine expires at the end of the year. According to reports, Azerbaijani gas would flow through the same pipeline network, replacing the volumes currently imported from Russia. The news of this alternative supply route helped alleviate some of the pressure on prices, with the TTF futures dipping to €39.18/MWh.
- Milder weather and reduced demand: The price decline was also supported by a milder weather forecast for Europe, which led to expectations of lower heating demand in the coming weeks. This, combined with subdued demand across much of the continent, added downward pressure on gas prices.
- Forward contract pricing: As of the end of the week, the one-month forward contract for TTF gas was trading at €39.93/MWh, indicating a relatively stable price outlook for the near term.
Implications for Russia and the EU
The developments in Türkiye’s energy strategy are particularly important for Russia, which is seeking to diversify its energy exports away from the European Union due to ongoing political and economic tensions. The creation of the Istanbul Gas Index could allow Russia to sell gas to Türkiye and other markets under new terms that are less vulnerable to the fluctuations and pressures of Western sanctions. This shift also strengthens Türkiye’s strategic position in the region, making it a central player in future European gas supply discussions.
Conclusion
In summary, TTF gas futures saw a mix of price movements in the final week of October 2024, driven by supply disruptions, geopolitical developments, and shifts in demand expectations. The rise in prices earlier in the week was followed by a decline as the market absorbed news of new supply agreements and milder weather forecasts. Meanwhile, Türkiye’s move to establish a domestic gas pricing index marks a significant step in the country’s ambition to become a regional gas hub, offering alternative pricing mechanisms and potentially reshaping the way natural gas is traded in the region.
