Natural gas: How are supply risks fuelling the price surge? – ING

Mounting supply concerns ahead of the 2026/27 winter have fuelled a rally in European natural gas prices, taking TTF above EUR100/MWh for the first time since 2022, according to ING’s Warren Patterson. Alongside disruptions to Persian Gulf LNG flows, Norwegian outages and forecasts of colder weather, he points to emerging demand destruction across the power and industrial sectors, with European chemical producers among those cutting gas consumption.

Is tighter supply fuelling the TTF rally?

"European natural gas prices rallied further yesterday, with TTF settling 4.85% higher. Prices broke above EUR100/MWh for the first time since 2022. The market has moved higher, with little sign of imminent relief in Persian Gulf LNG flows."

"If anything, the outlook appears more dire amid the risk of renewed US strikes on Iran following the US midterm elections next week. Reportedly, QatarEnergy has extended its force majeure for several buyers until the end of the year. It means significant LNG supply disruptions are creeping deeper into the heating season."

"Furthermore, forecasts show colder-than-usual weather in Northwest Europe from next week, pushing heating demand higher. This will likely start leading to more sustained drawdowns in storage. EU gas storage is just shy of 75% full."

"The key question is whether these higher prices will destroy demand. In power markets, we’re already deep into the gas-to-coal switching range. Industrial demand also shows signs of softening."

"Unsurprisingly, given the move in natural gas prices, investment funds increased their net long in TTF by 14.3TWh over the last reporting week to 207.4TWh. Fresh buying drove the increase, with gross long rising by a little more than 20TWh, while gross short also edged higher."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)