European gas prices exceeded €36/MWh in May

The market reacted to geopolitical uncertainty and disruptions in Norway

European gas prices remained above €35/MWh between May 15 and 22.

During this period, among other things, the market reacted to the lack of progress in the peace talks between Russia and Ukraine and forecasts of lower than usual temperatures in northwestern Europe starting May 22.

On May 20, TTF futures prices, according to ICE, rose to their highest level in a month – €36.97/MWh. Market concerns were caused by disruptions in gas exports from Norway, a key supplier to the EU, namely an unplanned shutdown at the Kollsnes processing plant. This week, prices were also supported by a prolonged outage at the key Norwegian Troll field. Eventually, Kollsnes resumed operations, and this somewhat relieved tension on the Dutch and British markets.

At the same time, TradingView notes that some LNG supplies were redirected from Asia amid weak demand. However, new buyers such as Thailand, Vietnam, and the Philippines may soon absorb larger volumes.

EU gas storage facilities, according to the AGSI platform, were 45.3% full (67.5% as of the same date in 2024). According to the Financial Times, the cost of replenishing them after the cold winter and depletion of reserves will increase by at least €10 billion this year. Reaching 90% of storage capacity by November will cost €26 billion, compared to €16 billion for 99% of capacity by the same date last year.

The European electricity market was also significantly affected by a drop in gas prices in April. At the beginning of the month, the Dutch TTF futures price (according to ICE) was €42.65/MWh, while at the end of the month (April 30) it was €32.3/MWh. Gas prices fell due to several factors, including the strengthening of the euro against the dollar amid financial market volatility caused by US tariffs. In addition, Trump’s tariffs led to a drop in demand for LNG in China, which provided relief to European buyers. Germany’s decision to ease its target requirements for the level of fuel injection into gas storage facilities also played a role.