Natural gas spike leaves TTF more expensive than Brent for next 2 years
Quantum Commodity Intelligence - Natural gas futures in Europe have become more expensive than Brent crude as far out as 2024, signalling the market fears long term supply disruptions after Russia's full-scale invasion of Ukraine.
The move could provide a tailwind for crude oil if the dynamic holds, as industry and power markets in Europe lock in switching from expensive natural gas to cheaper oil down the curve, boosting demand for gasoil and fuel oil.
Dutch-based TTF natural gas futures in the fourth quarter of 2024 were trading at €44.70/MWh at around 1000 GMT Thursday, or an equivalent barrels of oil equivalent price of around $85/b.
Meanwhile, the Brent December 2024 future was trading at $80.36/b.
Natural gas only regains a competitive edge against Brent in 2025.
The calendar 2025 TTF natural gas future was trading at €36.50/MWh, which was the equivalent of around $69.50/b in barrels of oil equivalent, while December 2025 Brent futures in a backward structure was much higher at $78.26/b.
Nearby natural gas prices in Europe have been much higher than oil prices since late July and has already triggered a wave of switching away from gas.
The all-time high natural gas prices in Europe in late December were the equivalent of around $350 in barrels of oil equivalent.
Switching in Europe added between 250,000 bpd and 300,000 bpd (roughly 200,000 bpd of gasoil, 30,000 bpd of fuel oil and 50,000 bpd in other products) over the fourth quarter, according to the International Energy Agency.
Thursday's move in nearby natural gas futures in Europe has likely come too late in the year to prompt another bout of prompt switching, as Europe luckily escapes with a warmer and windier winter than usual, lowering demand for heating and boosting wind power, analysts told Quantum.
The March TTF natural gas future was trading at €117.10/MWh at around 1000 GMT Thursday, or a hefty €223 in barrels of oil equivalent, while April Brent futures was surging above $104/b.
