European Gas Hits a Four-Year High
Dutch and British wholesale gas prices reached their highest since December 2022 as forecasts turned colder, storage stalled near 75% and LNG shipments from the Gulf stayed disrupted.
Wholesale natural gas prices in Europe rose to their highest since December 2022. The benchmark Dutch front-month contract at the TTF hub gained €3.54 to €97.39 per megawatt hour by 8:56 a.m. GMT, and the British front-month contract rose 9.90 pence to 240.74 pence per therm, according to ICE data cited by Gas Processing & LNG. Traders cited colder weather forecasts that should raise heating demand, and disrupted liquefied natural gas shipments from the Persian Gulf. European gas storage appears to have peaked at about 74.6% full, a level it has held for a week, below the seasonal average of about 80%. The Guardian reported that stores are at their lowest for the time of year in more than a decade, and analysts at Mind Energy said attacks on ships near the Strait of Hormuz and very low European storage are weighing on the market. Rystad Energy estimates Europe's LNG bill this year will rise by at least $12 billion, or 18%, even as the continent buys 24 million tonnes less.
Europe's wholesale gas prices rose to levels last seen in December 2022, according to the Guardian, Gas Processing & LNG and Oil & Gas Journal.
The prices
The Dutch front-month contract gained €3.54 to €97.39 per megawatt hour by 8:56 a.m. GMT, according to ICE data cited by Gas Processing & LNG. The Guardian reported the price at about €97, and Oil & Gas Journal reported that the contract touched €97.50 during the day. The British front-month contract rose 9.90 pence to 240.74 pence per therm, a gain of about 4%, according to Gas Processing & LNG and the Guardian. Both contracts were at their highest since December 2022, when prices were surging after Russia's full-scale invasion of Ukraine, the Guardian reported.
What traders cite
Forecasts turned colder over the weekend. LSEG analyst Wayne Bryan said colder temperatures should lift heating demand next week while outages in Norway limit exports, meaning storage would need strong withdrawals. The Guardian and Oil & Gas Journal also reported colder weather as a factor.
Gas Processing & LNG and Oil & Gas Journal reported that LNG shipments through the Strait of Hormuz are disrupted by the war between the United States and Iran, with Oil & Gas Journal citing disruptions to cargoes from Qatar and the United Arab Emirates. Analysts at Mind Energy said attacks on ships near the strait and very low European storage are weighing on the market. Oil & Gas Journal and Investing.com reported that European utilities are also competing with Asian buyers for available LNG cargoes.
Storage
European gas storage appears to have peaked at about 74.6% full, a level it has held for a week, according to Gas Infrastructure Europe data cited by Gas Processing & LNG. Oil & Gas Journal and Investing.com also put storage at 74.6%. The Guardian reported the seasonal average is closer to 80% and that stores are at their lowest for the time of year in more than a decade, after a slowdown in exports from Qatar and heavier summer use of gas for cooling. Investing.com reported it is the lowest late-October level since 2009.
The cost
Rystad Energy estimates that global LNG importers will spend at least $256.3 billion on LNG in 2026, up 18% from a prewar estimate of $217.8 billion, with Qatari and UAE deliveries assumed unavailable from March through the end of the year. "Europe faces the largest increase, with its LNG bill rising by a minimum of $12 billion, or 18%, even as demand falls by 24 million tonnes," Rystad said. Brent crude eased Monday and traded near $115 a barrel, the Guardian and Oil & Gas Journal reported.