European benchmark natural gas prices surged to their highest level since December 2022 on Friday, as Middle East escalation continues to restrict Qatari LNG flows and EU countries begin tapping storage ahead of the heating season.
The front-month contract at the Dutch Title Transfer Facility (TTF), Europe's benchmark for gas trading, jumped 3% at the Amsterdam opening to €92.30 ($103.40) per megawatt-hour (MWh). That follows a 3% rally on Thursday that pushed the contract above €90 per MWh for the first time since December 2022, when Europe faced its first winter without most Russian pipeline gas. The current price is equivalent to more than $30 per million British thermal units.
Oil prices rose alongside gas, with Brent hitting a five-month high of $114 per barrel as concerns grow that Houthi attacks could reach Saudi Arabian energy facilities.
EU gas storage stood at 74.62% full as of October 22, according to Gas Infrastructure Europe, more than 10 percentage points below the five-year average of about 86% for this time of year close to the start of the heating season.
"European gas prices also remain extremely sensitive to developments in the Persian Gulf, with LNG flows increasingly likely to be largely absent from the market for at least much of the Northern Hemisphere winter," ING commodities strategists Warren Patterson and Ewa Manthey wrote in a note on Friday. "EU gas storage also appears to have peaked at just under 75% full," they added.
Analysis
Why This Matters
- Europe is entering the heating season with storage more than 10 percentage points below the five-year average, increasing the risk of price spikes and supply competition during cold months.
- The continued absence of Qatari LNG tightens the global LNG market, affecting buyers beyond Europe, including in Asia.
- Prices at levels last seen in December 2022 point to renewed energy-cost pressure on households and industry across the region.
Background
Europe's gas market has been far more exposed to global LNG trade since Russia cut most pipeline supplies in 2022, making deliveries from producers such as Qatar critical. The TTF contract in Amsterdam has become the reference point for gas pricing across the continent, and traders now watch Persian Gulf developments closely because disruptions to LNG exporters quickly feed into European prices. This winter is shaping up as a test of how Europe copes with reduced Russian gas and a tighter global LNG market.
Key Perspectives
ING strategists: Warren Patterson and Ewa Manthey see European prices as extremely sensitive to Persian Gulf developments, with LNG flows likely to be largely absent for much of the winter. They also note EU storage has probably peaked at just under 75% full.
Market observers: The simultaneous rise in oil and gas prices reflects broader supply fears, with Brent at a five-month high on concerns that Houthi attacks could target Saudi energy infrastructure and further disrupt Gulf energy exports.
Critics and contrarians: While the current risk premium is driving prices higher, analysts would expect a sharp reversal if Middle East tensions ease or Qatari LNG shipments resume. The sensitivity cuts both ways, and much of the recent gain is tied to geopolitical risk rather than physical gas demand.
What to Watch
- Whether the TTF contract holds above €90 per MWh and pushes toward the December 2022 peaks.
- EU storage levels as withdrawals begin, and how quickly the gap to the five-year average widens or narrows.
- Developments in the Middle East, particularly any change in Qatari LNG export flows and any attacks on energy infrastructure in the Gulf.
