TTF front-month gas price highest since October 2023

Market: Natural gas
31/01/25

The TTF front-month gas price on Thursday reached its highest for any day since 23 October 2023, driven by the forecast for cooler and stiller weather in northwest Europe, as well as buying in Ukraine and flooding in Malaysia.

Argus assessed the benchmark TTF front-month at €51.81/MWh on Thursday, up from €51.25/MWh at the previous close. The contract had already jumped on Wednesday, rising by nearly €3/MWh from Tuesday.

Traders pointed to recent forecasts for colder weather as key drivers, after February had been projected to be mild for much of January. ECMWF ensemble forecasts at midday on Wednesday showed much lower minimum temperatures across key population centres in northwest Europe than those from the previous day. The projection for overnight lows in Amsterdam fell most sharply, particularly from 7 February, dropping as much as 3°C below Tuesday's outlook and the 10-year average. Similarly large day-on-day drops in London, Essen and Berlin are forecast for the second week of February. Minimum temperature forecasts on Thursday edged slightly higher for most of these cities, but remained lower than they had on Tuesday.

And forecasts were for a significant drop in wind generation, with load factors as low as 2pc over the coming weekend and on Monday in Germany. Gas-fired generation would probably have to ramp up to offset any up drop in wind output. Still weather pushing up power-sector gas demand and colder weather increasing heating demand would boost gas consumption.

Weather aside, traders pointed to support from news that Ukraine's Naftogaz is seeking to import gas in February, having previously said it had no plans to import this winter. While it is unclear how much Naftogaz is seeking, several traders said it could be looking for up to 3bn m³ in preparation for the next heating season. Additionally, the breakaway Moldovan region of Transnistria is expected to start receiving 2mn-3mn m³/d from the beginning of February, although it is unclear which country will supply this. Purchases for Naftogaz and Transnistria will tighten supply in eastern Europe following the end of Russian gas transit through Ukraine, providing price support throughout Europe as firms in the east may be forced to source gas from the west.

Traders also noted the risk of problems at Malaysia's 30mn t/yr Bintulu LNG export terminal as a result of flooding. Operator Petronas said operations had not been disrupted, and several vessels were loading at Bintulu on Thursday, although one analyst noted that it is difficult to judge the extent of any damages "until you have seen stable loadings excluding what was [already] in the tank". Another trader said if the previous outlook had been for stable production, the floods at least present a risk for LNG supply. This follows news earlier in the week that Indonesia might stop cargoes from being exported to cover shortfalls at home, which could further tighten the balance in Asia.

Traders also pointed to continued price reaction to THE's plans to subsidise injections into German storage over summer — which many have taken to mean that storages are likely to be filled ‘at any cost' — as well as generally low inventories going into February across the EU.

By Brendan A'Hearn

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