TTF natural gas futures storm to fresh highs, briefly above €250/MWh

16 Aug 2022

Quantum Commodity Intelligence - European natural gas prices surged to fresh six-month highs Tuesday and neared all-time closing highs, boosted by ongoing concerns over the reliability of Russian supplies and rocketing power prices across Europe.

TTF futures prices for Sep22 on Tuesday were trading at around €226/MWh close to the settlement, around 2.5% higher on the day, having at one point reached a high of €251.73/MWh, or an oil equivalent of more than $400/b.

In early March, then front-month April TTF futures briefly skyrocketed to €345/MWh, or an oil equivalent of more than $600/b, while at the same time Sep22 topped €270/MWh when markets surged 80% after Russia launched a full-scale invasion of Ukraine.

TTF futures and cash values gave up most of the gains on the same day, but European gas values have been in a strong uptrend since mid-June, following the dispute over a gas turbine for the Nord Stream pipeline and an explosion at the Texas Freeport LNG terminal.

In the first half of June, TTF gas futures were trading at around the €80/MWh mark.

"Hot weather in Europe has provided a boost to European natural gas prices," said Warren Patterson, head of ING's commodity research, although they noted European gas storage continues to edge higher, reaching almost 75%, which is in line with the five-year average and well above the 62% seen at this stage last year.

"Assuming we do not see any further reductions in Russian gas flows, the EU should hit its target of having storage 80% full by 1 November. However, that is a big assumption to make in the current environment," added Patterson.

European prices were given a further lift this week as maintenance started on Norway's Troll gas field, which is expected to last until the end of the month.

In addition, historically low levels on the Rhine river have led to delays in transporting coal, further boosting demand for pipeline gas.

German power prices for the year-ahead soared to fresh records of more than €500/MWh on Tuesday, according to exchange data, up more than fivefold in the last 12 months.