European gas jumps on supply and shipping risk

European wholesale natural gas (XNGUSD) prices rose on Wednesday, halting a recent deflationary phase across the market. The benchmark Dutch Title Transfer Facility (TTF) front‑month contract rose 2.7% to €86.99 per megawatt‑hour. In the United Kingdom, the National Balancing Point (NBP) front‑month contract gained 2.7% to 217.06 pence per therm.

A key driver of Wednesday’s price gains was renewed attacks on commercial shipping in and around the Strait of Hormuz. These incidents raised concerns over potential disruptions to liquefied natural gas (XNGUSD) cargoes from the Middle East bound for European terminals. The Strait of Hormuz is described as a critical transit artery for both crude oil and LNG, and the latest developments revived worries about physical supply constraints. The resulting risk premium contributed to a 2.7% surge across continental gas curves, with traders reassessing exposure to Middle Eastern supply routes.

The increase in European gas prices coincided with a rebound in international crude oil benchmarks. The simultaneous bounce in gas and oil highlighted cross‑asset sensitivity to developments in the Persian Gulf. Market participants also weighed the impact of stronger‑than‑expected US inflation and a firmer dollar, which make dollar‑denominated LNG cargoes more expensive for European importers and add a currency headwind to existing geopolitical risks.

Alongside Middle East shipping risks, changes in Norwegian pipeline exports also supported European gas prices. Norwegian exports fell by 2 million cubic meters per day from Tuesday to 332 million cubic meters per day, with flows to continental Europe also down 2 million cubic meters per day to 215 million. The reduction in supply came even as milder weather and softer demand limited the scale of the price gains. Forecasts for stronger wind speeds were expected to curb gas demand for power generation, tempering the market reaction to the flow cuts.

European Union gas storage levels provided additional context for the move. Storage was 72% full, compared with 82.55% a year earlier, indicating inventories are lower than at the same point last year. One strategist linked the tighter storage position to a Middle East LNG disruption that has left European inventories significantly depleted. The interplay between reduced pipeline flows, lower storage, and milder weather shaped traders’ assessment of near‑term supply and demand conditions.

Further along the curve, European natural gas (XNGUSD) futures prices also pointed to a firm market. As of 13:00 Moscow time, December futures at the TTF hub were trading at $1,002.585 per 1,000 cubic meters, having once again moved above the $1,000 threshold. Prices had surpassed that level around noon Moscow time, after previously trading above it on November 5. This move followed a period in which prices declined from October 30 to November 9 before resuming their rise.

Average pricing data underline how elevated current levels remain compared with the previous year. The average European gas price since the beginning of November stood at $1,021.9 per 1,000 cubic meters, 1.7% higher than in the same period a month earlier and 2.8 times the level recorded a year earlier. In October, the average European gas price rose 2.6‑fold year on year to $1,000 per 1,000 cubic meters, its highest level since late 2022. At their October peak, spot prices at the TTF hub exceeded $1,200 per 1,000 cubic meters, illustrating the scale of recent volatility and the sensitivity of prices to shifts in supply and geopolitical risk.