European Natural Gas Prices Rise Amid Supply Uncertainty

European natural gas prices climbed 3% in midday trading on Wednesday, driven by falling inventories and supply concerns. The Dutch TTF contract, Europe’s key gas benchmark, rose to €49.67 per megawatt-hour (MWh).

Key Market Drivers

1. Declining Gas Storage Levels

• EU gas storage was at 55.5% capacity as of Monday, according to Gas Infrastructure Europe.
• Net withdrawals were estimated at 4.8 terawatt-hours (TWh), increasing concerns over potential shortages.

2. Uncertainty Over Ukrainian Transit

• The Ukraine-Russia gas transit agreement has expired, raising doubts about future gas flows via Ukraine.
• Ukrainian President Volodymyr Zelensky has stated that Ukraine could facilitate gas transit from Azerbaijan, utilizing existing infrastructure.
• However, no concrete agreement has been reached, keeping markets uneasy about potential supply disruptions.

3. LNG Inflows Expected to Rise

• Europe is set to receive higher liquefied natural gas (LNG) inflows in the coming weeks.
• However, the market remains cautious, as LNG deliveries depend on global demand and shipping constraints.

Market Outlook

• Short-term price volatility is expected as traders assess storage levels, pipeline disruptions, and LNG imports.
• Any breakthrough on Ukrainian transit agreements or an increase in LNG supply could stabilize prices.
• On the other hand, prolonged uncertainty in Russian gas flows or a cold weather surge could push prices higher.