European gas hits highest since 2022 on Gulf LNG fears

Europe's benchmark gas price rose again on Friday, October 23, and reached its highest level since December 2022. Middle East LNG cargoes are still mostly missing from the market, and the region's storage sites hold less gas than usual as winter approaches. The Dutch TTF front-month contract was up about 3% to 4% in Friday trading and moved above €93 per megawatt-hour, which put it on course for a weekly gain of nearly 7%, Investing.com reported. Anadolu Agency put the weekly rise at 6.6%, measured from the €87.55 close on October 16. Trading Economics said this is the fourth weekly gain in a row.aa.com.tr+2

The rally adds to gains from Thursday, when TTF rose 3% and settled above €90 for the first time since December 2022, OilPrice.com reported. Back then, Europe was going through its first winter without most of its Russian pipeline gas. In Britain, NBP gas futures also rose, heading for a weekly gain of about 6%.oilprice.com+1

Gulf escalation drives prices

Traders pointed to rising conflict in the Middle East. Yemen's Houthis launched drone and missile attacks on Saudi targets, including Saudi Aramco's Shaybah oilfield. After the strikes, the U.S. State Department ordered non-emergency staff to leave its missions in Saudi Arabia. Brent crude futures reached a five-month high on the same concerns.finance.yahoo.com

According to Anadolu Agency, reports that Washington is preparing a possible new attack on Iran after the midterm elections made traders more worried that the disruption could last a long time. On Thursday, President Donald Trump suggested more strikes could follow. Attacks on ships in the Strait of Hormuz have also made it unclear when the region's LNG flows will return to normal.aa.com.tr

LNG shipments from the Middle East are still about 80% below year-ago levels. Alternative suppliers have limited ability to fill the gap, and Europe and Asia are competing for the cargoes that are available.aa.com.tr

Storage gap ahead of winter

Data from Gas Infrastructure Europe show EU storage sites were 74.62% full as of October 22. That is well below the five-year average of about 86% for this time of year. Trading Economics said it is the lowest level for the season since records began in 2009. Some EU countries have already started drawing on stored gas as temperatures fall.tradingeconomics.com+1

Commodities strategists Warren Patterson and Ewa Manthey at ING ↘ 1.85% wrote in a Friday note that "EU gas storage also appears to have peaked at just under 75% full." They added that European prices "remain extremely sensitive to developments in the Persian Gulf, with LNG flows increasingly likely to be largely absent from the market for at least much of the Northern Hemisphere winter".oilprice.com