European gas prices set to dip below pre-Ukraine war levels

By Murat Temizer

The fall in prices trading on the Netherlands-based virtual natural gas trading venue (TTF) is good news for all gas consumers, particularly in the EU and UK, according to Tom Marzec-Manser, head of Global Gas Analytics at Independent Commodity Intelligence Services (ICIS), on Tuesday.

ICIS asserts that the prolonged and muted gas demand as a result of decreased gas demand for heating in the residential and commercial sectors, as well as the unusually mild winter, has driven the recent slide in TTF prices.

"Improved nuclear generation and renewable output compared to last year has reduced gas-fired power production too, while gas demand from the industrial sector has also remained muted," the company added.

Prices on the TTF trading hub are an indicator of gas price trajectory for the wider economy because most long-term supply deals from across the EU and UK, either reference prices on this trading hub directly or a related value.

ICIS said that should the recent slide in prices continue on the trading hub, then it would be possible that the key TTF contract will close below €23.225 per MWh, the equivalent low price seen in summer 2023.

The next lowest price prior to this occurred in May 2021, shortly after European gas prices began to firm, as Russia’s Gazprom refrained from refilling storage units located within the EU.

The price of gas per megawatt-hour in March futures contracts on the TTF closed at €23.60 per megawatt-hour (MWh) on Monday.

According to ICIS, growing import demands in Asia and Red Sea tensions have not yet limited LNG's supplies into Europe from around the globe.

Together with the low demand, this has meant European storage units are on course to end the winter more than half full.

"The falling TTF is good news for all gas consumers and certainly means that the EU and UK are seeing light at the end of the gas crisis tunnel. The possibility of price volatility and spikes through next winter does remain, so we may not be out of the woods just yet,” Marzec-Manser said.

"We predict one more year of global gas market tightness, but as we move through 2025, new LNG supply should really start to ramp up, which should ease the supply/demand balance and allow TTF prices to weaken further,” he added.