European natural gas prices surged again yesterday, with the TTF benchmark settling 4.85% higher and breaking above EUR100/MWh for the first time since 2022. The rally was driven by growing supply concerns, particularly in the Persian Gulf, where LNG flows show no signs of easing. Reports indicate that QatarEnergy has extended its force majeure for several buyers until year-end, deepening supply disruptions as the heating season approaches. Unplanned outages in Norway are adding to the tightness in the market.
Weather forecasts predict colder-than-usual temperatures in Northwest Europe starting next week, which is expected to boost heating demand and accelerate storage withdrawals. EU gas storage levels are currently just under 75% full, with winter draws yet to fully begin. The question now is whether these elevated prices will curb demand, particularly in power markets where gas-to-coal switching is already occurring. Industrial demand is also showing signs of softening, with chemical company Yara reporting a more than 7% year-over-year drop in European gas consumption in the third quarter due to production curtailments.
Investment funds have increased their net long positions in TTF by 14.3TWh over the last reporting week, reaching 207.4TWh. The rise was driven by fresh buying, with gross long positions increasing by over 20TWh, while gross short positions also edged higher.