Wholesale natural gas prices in Europe and Britain have risen moderately, particularly on Wednesday, when the price of natural gas in the European market increased by 1.5% to €76.80 per megawatt-hour (MWh). This price increase comes as new temperature forecasts promise colder weather for Northwestern Europe, leading to changes in gas demand and storage.
Cold Forecasts and Their Impact on Demand
In Britain, gas prices rose by 0.5% to 189.03 pence per therm. The temperature changes, which are expected to increase heating demand, have prompted businesses to adjust their positions for the winter season. Weather models for Northwestern Europe have been significantly revised downward for the coming weeks, indicating an earlier-than-expected start to heating demand in large industrial and residential centers.
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Gas Storage and Market Conditions
Despite gas reserves in the European Union continuing to rise and currently reaching 73% of their capacity, this level is significantly lower than last year when higher reserves were recorded at the same time. This situation has left the market vulnerable to sudden increases in demand. Additionally, supply shortages and geopolitical tensions are keeping prices at elevated levels. Ongoing security risks in the maritime routes of the Persian Gulf and drone attacks on regional energy infrastructure continue to drive up the costs of delivering liquefied natural gas (LNG).
Investment banks, including UBS, have raised their price forecasts for Dutch TTF gas in the fourth quarter to €75 per MWh due to slow improvements in LNG supply and the gradual phasing out of Russian pipeline gas. Analysts expect that any severe cold in the near future will trigger a new wave of price increases in European gas markets.
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