European natural gas prices have remained stable despite significant disruptions in Middle Eastern liquefied natural gas (LNG) exports. According to UBS analysts, the stability is due to increased supply from other regions and weaker demand in Europe and Asia. Between March and September, Middle Eastern LNG supply dropped by about 60 billion cubic meters (bcm), but additional production elsewhere, including 17 bcm from the United States, helped offset the loss.
Asian LNG imports fell by roughly 9 bcm year-on-year, while European imports declined by approximately 10 bcm. These factors have limited immediate price pressures, but UBS warns that the offsets may not be enough as winter approaches and heating demand rises.
European gas storage levels are currently about 15% below seasonal averages, with inventories expected to enter winter at 74% capacity and decline to around 25% by spring. UBS estimates Europe may need an additional 27 bcm of LNG during winter compared to summer months, with Asian demand potentially increasing by another 2 bcm to over 20 bcm.
The bank has raised its fourth-quarter forecast to €75 per megawatt-hour from €62 previously, and its 2027 forecast to €45 from €40. These adjustments reflect expectations of a slower recovery in Qatari LNG exports and continued efforts to phase out Russian gas. Under a prolonged disruption scenario with colder weather, UBS sees fourth-quarter TTF prices averaging €90/MWh, with potential peaks near €120/MWh. A faster recovery in Qatari shipments and milder temperatures could bring prices closer to €50/MWh.