TTF prices ease after two-day gain on Wednesday

European natural gas futures fell to around €33.2 per megawatt hour on Wednesday, pausing a two-day rally as ample inventories continued to offset rising seasonal demand expectations.

The market remains well supplied heading into the winter heating season, with EU storage levels at 82.9% of capacity, comfortably above the five-year average. Among major economies, Italy’s reserves stand at 93%, France’s at 92.5%, and Germany’s at 76.2%, helping to ease concerns about potential shortages even as temperatures begin to drop.

Nevertheless, weather forecasts are pointing to a colder-than-usual spell in mid-October, with temperatures in France and Germany expected to average about 2°C below seasonal norms, likely boosting heating demand and short-term gas consumption. Traders are closely monitoring these developments, as a prolonged cold snap could quickly draw down inventories and tighten the supply-demand balance later in the quarter.

Adding to the uncertainty, Russia launched its largest wave of attacks on Ukraine’s gas infrastructure since the start of the war, targeting key storage and transit facilities.

While immediate impacts on European supplies have been limited, the strikes have raised renewed concerns over potential disruptions to regional gas flows and the prospect of increased European gas exports to Ukraine to offset domestic shortages this winter. These risks have reintroduced a degree of geopolitical premium to the market, even as overall fundamentals remain relatively stable.

In the longer term, structural changes in the global gas landscape are beginning to take shape. Global LNG liquefaction capacity is projected to rise by about 60% by 2030, with nearly half of that expansion coming from the United States, followed by Qatar, Australia, and a new wave of African producers.

While this buildout is expected to enhance supply security and flexibility, analysts warn that demand growth may not keep pace, particularly in Europe and parts of Asia where decarbonization efforts and renewable energy expansion are accelerating. As a result, the market could face periodic oversupply pressures, keeping prices subdued and volatility elevated in the years ahead, unless unexpected weather or geopolitical shocks disrupt the balance.