TTF gas slumps 8% as milder weather returns, demand falls

Quantum Commodity Intelligence – European natural gas prices slumped by almost 8% Monday, as milder temperatures returned following last week's brief cold snap across the more northerly parts of Western Europe.

Benchmark TTF futures for Jan24 were 7.8% lower versus pre-weekend levels at just above €40/MWh, the lowest front-month price since early October, with gas offtakes set to remain seasonally low as milder temperatures return.

Despite the first chills of winter arriving in late November, prices barely reacted to the upside, with stocks at record levels and both household and industrial demand sharply lower since Russia's invasion of Ukraine, which in turn curtailed supplies of Russian pipeline gas to the eurozone.

"The European gas market couldn't have entered the 2023/24 heating season in better shape. The heating season started with storage essentially 100% full," said Warren Patterson, head of ING's commodity research.

"And while storage has started to draw, it is doing so at a relatively slow pace, which has ensured that storage remains at record levels for this time of year," added Patterson.

Temperatures across most parts of northern Europe had moved back into positive Celsius territory by Monday after recent sub-zero temperatures, while the likes of London and Paris are forecast to register double-digit Celsius numbers by the weekend.

Last month, GasInfrastructure Europe calculated European storage tanks at over 99% full, which is effectively at operational capacity, whereas this time of year would typically see stocks at around 90%.

Supplies were said to be high amid record volumes of LNG arriving in Europe for the winter season, while no major outages were reported with Norway's production said to be at close to capacity.

Separately, a stranded LNG tanker at a terminal in Australia's Curtis Island LNG plant was reportedly moved over the weekend.