European Natural Gas Prices Retreat from 2022 Peak, Still Up Over 30% in October

On November 2, European natural gas prices declined as investors took profits following a sharp rally in October.

The Dutch TTF front-month futures, the benchmark for European natural gas prices, fell 3% to 101 euros per megawatt-hour, pulling back from a high above 104 euros at the end of October. UK NBP natural gas futures dropped 3.2% to 249.40 pence per therm.

Previously, Dutch TTF natural gas futures surged approximately 34% to 36% cumulatively in October, while UK natural gas futures also gained more than 30%, marking the most dramatic monthly rally since the 2022 European energy crisis.

Despite the short-term price pullback, the tight supply situation for European natural gas remains unresolved. Currently, the inventory rate of underground natural gas storage facilities in the EU stands at approximately 74%, below the five-year average of 86% for the same period, and significantly lower than the levels exceeding 95% at the start of the heating seasons in 2023 and 2024. This marks the lowest level for early November since records began in 2009.

As weather forecasts indicate unusually low temperatures across northern and central Europe this week, some regions have already begun withdrawing natural gas from storage ahead of schedule, further intensifying winter supply pressures.

Meanwhile, the ongoing situation in the Middle East continues to affect global liquefied natural gas (LNG) transportation. The risk of drone and missile attacks in the Strait of Hormuz and the Red Sea has forced some transport vessels to reroute around the Cape of Good Hope in Africa, resulting in a significant year-on-year decline in Middle Eastern LNG supplies reaching Europe.

Under the dual pressures of low inventories and disrupted transportation, European buyers still need to compete with Asian buyers for spot LNG resources, providing support for natural gas prices.