Natural gas prices in Europe are rising, exceeding 73 dollars per megawatt-hour, levels not seen since 2023. The Dutch TTF contract, which serves as the European benchmark, has risen almost 50% in the last six months and 120% in the last 12 months. Analysts and researchers attribute this rise to lower-than-expected storage levels in Europe, the war in the Middle East and limitations on liquefied natural gas exports through the Strait of Hormuz, through which almost 20% of global LNG supply passed.
European reserves stood at 66.59% of total capacity on September 6, when on the same day the previous year they were at 78.95%. The European Union's goal of filling 80% of reserves by November 1 is within reach but requires constant injections over the coming weeks. Storage is expected to fall below the 90% target and perhaps even below 80% between October and November, according to Aurora Energy Research. Despite this delay, experts assure that Europe is not at risk of stock rupture or shortage, although the risk of high prices during cold spells or supplier outages remains.
Forecasts diverge significantly: Morgan Stanley anticipates an average of 88 euros per MWh in the fourth quarter, Goldman Sachs around 53 euros, and Aurora Energy Research points to 65 euros. Current prices, above 70 euros, are already penalizing for industry and worsen electricity prices and inflation, although they are far below 2022 levels, when TTF exceeded 300 euros per MWh. The 100 euros per megawatt-hour threshold is pointed to as the level from which economic damage can become more significant.
Competition with Asia for LNG cargoes is intensifying, with some ships initially destined for Europe being diverted to the Asian market. This situation is more severe for regions like South Asia, which do not have the same financial capacity to compete. In the opposite direction, Henry Hub in the United States remains at pre-war levels due to high North American production. In Germany, national reserves stand at only 50.1%, compared to 67% last year, making the country more vulnerable.
