Fitch predicts gradual drop in European gas prices
Fitch Ratings anticipates a gradual decline in European natural gas prices over the medium term, according to Jakub Zasada, EMEA Director for Corporate Ratings. Speaking at the “Fitch in Azerbaijan” event in Baku, Zasada noted that while the agency recently raised its price forecasts for Europe’s TTF gas due to reduced LNG supplies from the Middle East, this trend is expected to reverse.
The decline in LNG shipments, particularly from Qatar, has created a global gas shortfall of around 50 million cubic meters. This has intensified competition between European and Asian buyers, driving up TTF prices. The higher cost of LNG tankers and insurance challenges have further limited supply flexibility.
As of late September, Europe’s gas storage facilities were about 71% full, down from the 80-90% range seen in previous years. Despite this, Fitch believes Europe has sufficient reserves to avoid serious supply disruptions. However, the lower storage levels are contributing to higher prices and market volatility.
Looking ahead, the agency expects TTF prices to decrease as new LNG production capacity comes online in the U.S. and Qatar. Zasada cautioned that by the end of the decade, these projects could lead to an oversupply in the global gas market.