European natural gas prices experienced an uptick on Monday morning, driven by ongoing supply risks from conflicts in the Middle East and Ukraine, as well as an approaching cold snap ahead of the winter heating season.
The Dutch TTF Natural Gas Futures, a key benchmark for Europe’s gas trading, rose by 2.35% to $39.20 (35.25 euros) per megawatt-hour (MWh) at 11:34 a.m. in Amsterdam. This increase comes after a 3.4% decline in prices the previous week, as traders assessed the potential supply threats from the conflicts in the Middle East and the ongoing tensions at the Ukraine-Russia border. Notably, the Sudzha gas metering station, which facilitates the flow of Russian gas to Europe, is located in the Russian region of Kursk, where fighting has persisted.
Currently, European gas storage levels are over 93% full, according to Gas Infrastructure Europe. While this provides some comfort regarding supply ahead of winter, it may not be enough to meet all of Europe’s heating needs. Traders remain vigilant about potential disruptions that could influence prices.
The situation in the Kursk region is causing concern among gas market participants, especially as the gas transit agreement for shipping Russian gas through Ukraine is set to expire at the end of this year. Ukraine has indicated that it will not negotiate an extension of this deal.
Meanwhile, tensions in the Middle East are escalating between Israel and Hezbollah in Lebanon. The region is on the verge of possible all-out conflict, which could threaten natural gas fields off the coast of Israel that supply gas to Israel, Egypt, and Jordan.
In Norway, maintenance at the Skarv and Sleipner facilities has been extended, resulting in a reduction of Norwegian gas supply to Europe in the coming days.
Weather forecasts indicate that parts of Europe may experience lower-than-average temperatures by the end of this week, which could lead to increased demand for heating and power generation.
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