TTF prices rose to two-week highs

European natural gas futures rose to €34.8 per megawatt-hour (MWh) on Friday, reaching their highest level in two weeks, as markets responded to a combination of weather-driven demand forecasts, regulatory developments, and long-term supply outlooks.

The increase reflects renewed short-term pressure on energy markets following a period of relative stability earlier in the summer.

The upward momentum in prices was largely fueled by weather forecasts pointing to above-average temperatures across Western Europe. The upcoming week is expected to bring another bout of intense heat, further straining energy systems as cooling demand surges across households and industries.

This follows what meteorologists have confirmed was the hottest June on record for much of the region, with parts of Spain, France, and Italy experiencing temperatures in excess of 38°C (100°F). The unusual heat was compounded by record-high sea surface temperatures in the western Mediterranean, which are likely to extend the duration and intensity of heatwaves.

Despite the bullish weather outlook, policy developments have helped ease concerns over near-term gas shortages. This week, the European Parliament approved amendments to gas storage requirements, extending the deadline for member states to reach 90% storage capacity until December, rather than earlier seasonal cutoffs.

The move is intended to provide greater flexibility for procurement and injection, alleviating market fears of a potential supply crunch and helping to mitigate price volatility as the winter heating season approaches.

On the supply side, sentiment was further stabilized by comments from TotalEnergies CEO Patrick Pouyanné, who expressed confidence in Europe’s long-term energy security. He stated that the continent is on track to wean itself off Russian liquefied natural gas (LNG) by 2028, thanks to a wave of new production capacity coming online in the United States and Qatar.

These projects are expected to help diversify European supply sources and reduce dependence on geopolitically sensitive regions, particularly in the wake of sanctions and disruptions stemming from the war in Ukraine.

At the same time, Pouyanné reassured markets about gasoline and refined fuel supplies, noting that European inventories remain stable ahead of the peak summer travel season. However, he issued a cautionary note regarding emerging trade tensions, particularly in light of President Donald Trump's renewed push for protectionist tariffs.

The prospect of escalating US tariffs on European goods has raised concerns among energy market participants about slower economic growth, which could eventually dampen industrial demand for energy across the continent.

Looking ahead, traders will continue to monitor temperature patterns, storage levels, and geopolitical developments, especially with the heating season on the horizon and global LNG markets remaining tightly balanced. While near-term fundamentals appear stable, the market remains vulnerable to weather shocks, infrastructure disruptions, and further political escalations, all of which could trigger renewed volatility in natural gas prices.

In summary, the recent rise in European gas futures underscores the sensitive interplay between climate patterns, regulatory policy, and long-term supply strategy, as the continent navigates a complex and evolving energy transition landscape.