The benchmark European natural gas price jumped by 3% at opening in Amsterdam on Friday as the Middle East escalation continues to restrict Qatari LNG flows and some EU countries started tapping gas in storage as temperatures drop.
The front-month price at the Dutch Title Transfer Facility (TTF), the benchmark for Europe’s gas trading, jumped by 3% at 7 a.m. Amsterdam time on Friday, as oil prices also rose, and Brent hit a five-month high of $114 per barrel as concerns grow that Houthi attacks could hit Saudi Arabian energy facilities.
At $103.40 (92.30 euros) per megawatt-hour (MWh), the European gas price is now at its highest levels since December 2022, when Europe faced the first winter without most of the Russian pipeline gas supply. The current price is also equivalent to over $30 per million British thermal units (MMBtu).
“European gas prices also remain extremely sensitive to developments in the Persian Gulf, with LNG flows increasingly likely to be largely absent from the market for at least much of the Northern Hemisphere winter,” ING’s commodities strategists Warren Patterson and Ewa Manthey wrote in a note early on Friday.
TTF rallied 3% on Thursday, settling above 90 euros per MWh, its highest since December 2022. On Friday morning, the TTF benchmark price topped 92 euros per MWh as the heating season approaches, Europe is still deprived of Qatari LNG, and storage sites are only 75% full, which is over 10 percentage points lower than the five-year average.
EU storage sites were only 74.62% full as of October 22, per data from Gas Infrastructure Europe. That’s well below the five-year average of about 86% for this time of the year so close to the start of the heating season.
“EU gas storage also appears to have peaked at just under 75% full,” ING’s strategists said today.
By Tsvetana Paraskova for Oilprice.com
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