European wholesale natural gas prices took a breather on Tuesday, sliding back a bit after hitting fresh 2022 highs just a day earlier. Traders stepped back to see how bad recent pipeline issues in Norway really are. Even with the slight drop, everyone in the market knows that dangerously low regional storage will stop prices from falling too far.
The benchmark Dutch TTF front-month contract dropped for the first time in five sessions. It slipped down to 96.29 euros per megawatt-hour (MWh) after settling at a four-year record of 97.19 euros on Monday.
Across the water, the British equivalent, the NBP natural gas contract, showed the same cooling trend. It settled at 238.00 pence per therm, easing off Monday's close of 239.33 pence as immediate physical supply worries took a quick pause.
Norwegian Pipeline Trouble Adds to Supply Headaches
This tiny dip comes right after a fierce jump at the start of the week. That spike happened when unexpected supply cuts hit Europe's biggest pipeline supplier, Norway.
Gassco, the Norwegian network operator, reported an unplanned shutdown at the Oseberg offshore field. What started as an estimated loss of 7.7 million cubic meters per day quickly jumped to a massive 12.7 million cubic meters per day.
That outage caught European trading desks off guard at the worst possible time. Deliveries stopped just as energy suppliers were scrambling to buy physical gas before winter heating demand really kicks off.
Empty Storage Facilities Leave Almost No Safety Net
Official numbers from Gas Infrastructure Europe (GIE) show underground storage tanks across the EU sitting at only about 74.6% full. This is the lowest inventory level seen in late October since records started in 2009. For comparison, the normal historical average for this time of year is around 86%, and last year storage was sitting pretty at 95%.
This big deficit is getting worse because of headaches on global shipping routes.
Ongoing conflicts involving Iran and Houthi fighters in Yemen have choked off Liquefied Natural Gas (LNG) tankers moving through the Strait of Hormuz. Because of that choke point, seaborne deliveries from the Middle East into Europe have tumbled nearly 80% compared to last year.
Goldman Sachs analysts pointed out that the jump in European gas risk premiums directly mirrors growing fears over Middle Eastern supplies. They noted that recent tanker attacks near Hormuz continue to make daily ship crossings unpredictable, keeping future deliveries uncertain.
With colder weather forecast to hit Northern Europe in early November, power companies will probably have to tap their thin gas reserves much earlier than usual. That setup will likely spark a fierce bidding war between European buyers and Asian importers to grab any available Atlantic LNG cargoes.
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Key Takeaways for European Gas Traders and Utilities
- Short-Term Pullback:Dutch TTF and UK NBP contracts eased off multi-year peaks, but the drop looks like a brief pause rather than a true trend reversal.
- Storage Deficit:European storage levels stand near 74.6%, leaving virtually no buffer if early winter brings extended cold snaps.
- Supply Bottlenecks:Unplanned outages at Norway's Oseberg field and an 80% drop in Middle East LNG imports keep spot physical supply tight.
- Global Bidding Pressure:European utilities will have to pay higher premiums to compete against Asian buyers for spot Atlantic LNG shipments.