Europe’s benchmark natural gas prices held above the 80-euro mark early on Wednesday, staying close to 2022 highs, as low gas volumes in storage sites fuel concerns about winter supplies amid continued disruption and widening conflict in the Middle East.
The front-month price at the Dutch Title Transfer Facility (TTF), the benchmark for Europe’s gas trading, rose by 0.3% to $$92.95 (80.545 euros) per megawatt-hour (MWh) as of 9:15 a.m. in Amsterdam on Wednesday.
Prices have held above the 80-euro per MWh threshold this week, after soaring by 6% on Monday, to hit the highest level since the 2022-2023 crisis.
Gas prices in Europe, fresh off five consecutive weeks of weekly gains, continued their rally this week, as risks to supply of oil and gas in the Middle East materially increased over the weekend after Saudi Arabia shut down its key East-West oil pipeline that helps it bypass the Strait of Hormuz.
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Europe is heading into winter with one of the lowest levels of gas in storage in the past two decades as the war in the Middle East crippled LNG supply from Qatar, sent gas and LNG prices in Europe and Asia skyrocketing, and intensified competition for readily available global LNG cargoes that don’t need to cross geopolitically charged chokepoints.
Spot LNG prices in Northeast Asia have jumped by $2.70 from last week to $28.40 per million British thermal units (MMBtu) this week, as Energy Intelligence has assessed for prices for LNG deliveries one to two months ahead.
“Escalation in the Middle East is deflating hopes of any imminent pick-up in LNG flows from the Persian Gulf. This leaves the global LNG market tight and vulnerable as we edge closer towards the northern hemisphere heating season,” ING’s commodities strategists Warren Patterson and Ewa Manthey wrote in a note on Tuesday.
“Moves in the JKM-TTF spread suggest that Europe should be pulling in spot cargoes. Despite this, the region will struggle to hit its lower storage target of 75% ahead of winter,” the strategists said.
By Michael Kern for Oilprice.com
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