TTF gas slumps to 4-mth lows as Europe basks in heatwave
Quantum Commodity Intelligence – European natural gas continued to tumble sharply this week, as unusually mild autumnal temperatures across much of the continent offset any lingering supply concerns which underpinned firmer prices during the third quarter.
Benchmark TTF futures for Nov23 were down around 6% late Tuesday at €36.80/MWh, having registered a similar percentage decline in the previous session, while Dec23 was down 5% at €41.70/MWh, registering the lowest levels since June and close to 2023 lows.
Europe has been basking in relative heatwave-like conditions for the time of year, sapping demand for natural gas at a time when heating demand normally starts to pick up.
The warm conditions are forecast to last well into October, with much of continental Europe still posting temperatures well above 20C and over 30C for parts of southern Europe.
European stock levels are already 95% full, which operationally is close to maximum capacity, so a mild October will keep natural gas tanks filled ahead of the peak season when Europe faces a second winter with sharply reduced supplies of Russian pipeline gas.
Power generation also received a boost, with solar production running at levels comfortably above seasonal norms, while electricity from wind power in the UK is forecast to pick up later this week.
The weather-led demand slump was enough to offset recent global supply disruptions in global gas and LNG production, including extended maintenance at Norway's giant Troll field, industrial action in Australia and supply interruptions at two US LNG processing plants.
The Nov23 contract briefly soared above €55/MWh in late August on concerns that the Australian industrial action would cause major supply constraints, but have gradually retreated, albeit with a number of spikes along the way.
Likewise, key TTF winter contracts for Jan24 and Feb24 have slumped from an August peak of over €60/MWh, and €50/MWh in late September, to below €45/MWh this week.
