Storm Brewing Over Europe Natural Gas Market as Buyers Compete
The European natural gas market is slowly waking up to the challenge of a vigorous summer of restocking, as the region begins to lose its footing amid competition with buyers across Asia.
European natural gas buyers face an uphill battle in a competition with Asia to secure enough tonnage ahead of the fourth quarter this year, given inventories in Europe fell close to four-year lows at the end of the winter, data from Gas Infrastructure Europe (GIE) showed.
Gas stocks in the EU fell as low as 27.7% full on March 31, according to GIE data. Comparatively, stocks dipped to 33.8% capacity a year earlier, with inventories in winter 2025-26 at the lowest since March 2022. As of May 19, EU levels have recovered to 36.7%, which is 8.07 and 4.9 percentage points lower than in 2025 and 2022, respectively.
Europe faces an uphill battle to replenish stocks ahead of the fourth quarter and meet regulatory goals. Member states are expected to hit a 90% filling target, but the new rules allow for a broader deadline of Oct. 1 to Dec. 1, rather than the previous hard Nov. 1 deadline.
There is also leeway on storage amounts, allowing inventories to be refilled only to 75% full. A 10% flexibility allowance was granted in case of difficulties when rebuilding storage, as well as a 5% allowance in the event of persistent unfavorable market conditions.
Summer TTF trades above Q4
The front-month TTF (Dutch Natural Gas Title Transfer Facility) futures contract traded as high as €52.565/MWh at 06:51 a.m. U.K. time on Wednesday, the equivalent of $18.21/MMBtu, data from the Intercontinental Exchange (ICE) showed. Front-month TTF contract prices averaged $15.18/MMBtu at 4:30 p.m. U.K. time in April.
The front month TTF and contract price for July are both trading above fourth quarter 2026, with the front-month around 3.5% higher than December at midday on Wednesday. It is unusual for summer contracts to trade above winter levels, and this is disincentivizing restocking for winter consumption because of the cost of hedging price risk, according to Global Risk Management chief analyst and head of research Arne Lohmann Rasmussen.
One of the drivers for these recent gains on the TTF future contract has been a series of planned outages at fields in the North Sea.
The 130.4 million cubic meters/day Troll field shut down completely for 24 hours on Wednesday, data from Norwegian gas operator Gassco showed. The Troll field contains approximately 40% of total gas reserves in the Norwegian continental shelf. Next, the 5.7 million cubic meters/day Kvitebjorn unit went completely offline on Wednesday morning local time. It will remain shuttered for five days. The 26.6 million cubic meter/day Oseberg unit is also currently offline, and its output fell to zero from May 1. The facility will return to operation on May 25.
LNG imports into Northwest Europe are starting to dwindle, with 3.37 million mt taken in so far in May, while another 1.65 million mt is expected to unload in the next 11 days. The region imported 5.84 million mt of LNG in April, Vortexa data showed.
Pull from the East
At a time where European buying needs to step higher, it is fighting a battle against Asian buyers to secure tonnage, a battle which is expected to heat up this summer. Northeast Asia has imported 9.68 million metric tons of LNG in May with an additional 4.32 million mt on water and expected to be discharged before the close of the month, data from shipping analytics provider Vortexa showed. Comparatively, the region imported 13.21 million mt in April, some 5.6% lower than the anticipated total for May.
The liquefied natural gas (LNG) Japan Korea Marker (JKM) for July closed at $19.615/MMBtu on May 19, up 16.3% since the start of the month and 63% from year earlier, data collated by OPIS showed.
The pricing spread from the U.S. to Asia and Northwest Europe has favored the Asian basin since the early April, adding to the pressure on the European restocking attempts. With a tighter global LNG market and a more attractive arbitrage for volumes heading East from the U.S. Gulf rather than into Europe, pull cargoes are expected to being redirected away from the Atlantic basin.
Perfect storm
The global LNG market could get even tighter over the next few weeks with proposed strikes at Australian LNG facilities which could last until the second week of June.
Finally, with the ongoing struggles to release tonnage through the Strait of Hormuz and damage to QatarEnergy’s Ras Laffan complex in March, the world’s largest LNG export terminal that accounted for 18.5% of global shipments last year, the Asia-Europe market battle is set to rumble on this summer.
Citing a growing risk of higher prices as the summer approaches, there is a “new perfect storm for European gas prices in the making”, Rasmussen said.
–Reporting by Jamie Aldridge, jaldridge@opisnet.com