Key Moments
- TTF benchmark prices moved above EUR50/MWh, with upward momentum continuing in early-morning trading.
- ING strategists say the market is not fully reflecting potential supply disruptions linked to the Persian Gulf.
- EU gas storage stands at 36% of capacity, below the 5-year average level of 50%, highlighting a relatively tight backdrop.
Middle East Tensions Support TTF Rally
ING strategists Warren Patterson and Ewa Manthey note that European gas prices have firmed again, with the TTF benchmark pushing beyond EUR50/MWh as ongoing risks in the Middle East underpin the market. They point out that this momentum has carried into early-morning trading, signaling sustained strength rather than a brief spike.
According to the strategists, geopolitical uncertainties in the region remain unresolved, providing a key driver for the recent gains in European gas benchmarks.
Persian Gulf Supply Risk Seen as Underpriced
Patterson and Manthey reiterate their view that the market is not adequately valuing the potential scale of supply disruptions linked to the Persian Gulf. They emphasize that current pricing does not fully capture the possible impact on contracted volumes from the region.
They expect that buyers in Asia will increasingly turn to the spot market to replace disrupted contractual deliveries from the Persian Gulf. This shift, they argue, would intensify competition between Asian and European buyers for available spot cargoes.
| Factor | Current Situation |
|---|---|
| TTF price level | Broke above EUR50/MWh with strength continuing in early-morning trading |
| Persian Gulf supply risk | Viewed by ING as underpriced by the gas market |
| Asian buyer behavior | Expected to increase spot purchases to replace disrupted contracted cargoes |
| Market competition | Rising competition between Asian and European buyers in the spot market anticipated |
European Storage Levels Highlight Tightness
The strategists underscore that European Union gas storage is relatively constrained. Storage facilities are reported to be 36% full, compared with a 5-year average utilization rate of 50%. This gap underscores a tighter-than-normal buffer heading into the current period.
In their assessment, this storage backdrop, combined with heightened Gulf-related supply risks and potential additional demand from Asian buyers in the spot market, contributes to the renewed strength in TTF pricing.
Analyst Commentary
The following comments from Patterson and Manthey frame their outlook on current market dynamics:
“The European gas market is seeing renewed strength with little sign of a resolution in the Middle East.”
“TTF broke above EUR50/MWh and this strength is continuing in early-morning trading today.”
“We have highlighted several times that the gas market is underpricing the scale of the supply impact from the Persian Gulf.”
“Asian buyers will need to enter the spot market to replace disrupted contracted cargoes from the Persian Gulf, increasing competition between Asian and European buyers.”
“Storage in the EU remains relatively tight at 36% full compared to a 5-year average of 50% full.”
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