BAKU, Azerbaijan, December 6. European natural gas prices have remained significantly above the year-to-date average, as colder temperatures drive unexpected storage withdrawals, Trend reports via BMI, a Fitch Solutions company.
According to BMI, the benchmark Dutch TTF front-month contract rose by 1.7% week-on-week, closing at EUR47.0/MWh on December 4. This marks a 16.7% increase compared to the previous month and stands 38.9% higher than the year-to-date average of EUR33.9/MWh.
The surge in prices is attributed to a faster-than-expected drawdown of gas reserves due to colder weather. As of December 3, EU gas storage levels had dropped to 84.2%, down from 93.9% at the same time in 2023. This decline is expected to pose upward pressure on prices in 2025, as the lower starting point for storage refills could increase demand from the second quarter onwards.
Further complicating the outlook is the expiration of the Russia-Ukraine gas transit deal at the end of 2024, heightening supply concerns. However, BMI forecasts stable LNG imports into the EU, projected to rise by 2.4%—from 127.1 bcm in 2024 to 130.1 bcm in 2025. Additionally, pipeline deliveries from Norway, which have already seen a 9.0% year-to-date increase, are expected to mitigate some of the upward price pressures.
Despite these risks, BMI maintains its European gas price forecast at EUR36/MWh for 2024 and EUR32/MWh for 2025. The long-term outlook remains bearish due to an anticipated oversupply in the global LNG market. Projects from major exporters such as Qatar, the United States, and Mozambique are set to boost LNG capacity, likely driving prices downward.
At the same time, sluggish industrial activity in Europe and a continued shift toward renewable energy are expected to curb natural gas demand. However, BMI warns of potential short-term price volatility driven by geopolitical tensions or extreme weather events, which could disrupt supply and offset bearish trends.
As Europe braces for a challenging energy landscape, market dynamics will remain highly sensitive to storage levels, geopolitical developments, and global LNG supply expansion.
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