The Commodities Feed: European gas tops EUR100 as supply fears grow
The current trajectory of European natural gas prices suggests significant upward pressure due to mounting supply fears. As highlighted in the recent commentary, prices have surpassed EUR100/MWh for the first time since 2022, driven by geopolitical tensions and supply disruptions. Per the full note from ING, factors such as extended force majeure declarations from QatarEnergy and unplanned outages in Norwegian gas supplies underline the tightening supply situation. Consequently, this spike in energy costs is already prompting adverse effects on industrial demand across Europe, especially in energy-intensive sectors like chemicals.
What the desk is arguing
The desk argues that the surge in European gas prices, now exceeding EUR100/MWh, could have broader repercussions for the eurozone economy and thus influence currency movements. The commentary from ING details how geopolitical tensions and supply constraints are escalating energy costs, driving a worrying trend for both consumption and production capacities in Europe.
Recent data shows that TTF prices surged by 4.85% in a single day, marking a significant increase that traders must monitor closely. The ongoing issues in LNG supply, particularly with Qatar extending force majeure conditions and possible U.S. strikes on Iran, indicate that these price pressures might persist, affecting broader market dynamics.
Where it sits in our coverage
The desk is currently targeting a EUR/USD of 1.075, aligning with JPMorgan's target of 1.10 for Mar-26 while diverging from Bank of America's more conservative estimate of 1.04.
This view aligns with the broader market sentiment that anticipates a stronger dollar reflective of rising risk premiums attached to natural gas prices and potential inflationary pressures on the European economy. The desk's call, positioned centrally, reflects a cautious but optimistic outlook against the backdrop of incoming data.
How other firms see it
Major firms like JPMorgan are aligned with a bullish outlook on EUR/USD, reflecting similar sentiment toward rising energy costs, while BofA holds a contrary position, expecting a downward correction.
The trajectory of EUR/USD appears influenced by the tight correlation between energy prices and inflation expectations, particularly as markets digest data on energy consumption and production. Observers should also be mindful of the interconnected dynamics with gas-to-coal switching and its implications for power prices across Europe.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01European gas prices have topped EUR100/MWh, signaling tight supply conditions.
- 02Geopolitical tensions and supply outages are driving energy costs higher.
- 03Industrials in Europe are beginning to curtail production due to heightened gas prices.
- 04Investment funds are increasing net long positions, indicating bullish sentiment.
Market implications
Traders should monitor the EUR/USD closely as it reacts to energy market developments, particularly if natural gas prices sustain their upward trend. Expect volatility, especially around colder weather forecasts which could amplify heating demands and strain supply further.
Risks to this view
A sudden resolution to geopolitical tensions or restored supplies from Qatar and Norway could trigger a sharp reversal in gas prices. Additionally, if industrial demand fails to soften as expected, it would challenge near-term price forecasts and broader economic stability in Europe.
Articles The Commodities Feed: European gas tops EUR100 as supply fears grow Published 02:02 Commodities daily Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download European gas prices climbed above EUR100/MWh as mounting supply concerns rattle the market ahead of the 2026/27 winter Warren Patterson European natural gas prices rallied further yesterday, with TTF settling 4.85% higher. Prices broke above EUR100/MWh for the first time since 2022. The market has moved higher, with little sign of imminent relief in Persian Gulf LNG flows.
If anything, the outlook appears more dire amid the risk of renewed US strikes on Iran following the US midterm elections next week. Reportedly, QatarEnergy has extended its force majeure for several buyers until the end of the year. It means significant LNG supply disruptions are creeping deeper into the heating season.
In addition, several unplanned outages in Norway will add to supply concerns. Furthermore, forecasts show colder-than-usual weather in Northwest Europe from next week, pushing heating demand higher. This will likely start leading to more sustained drawdowns in storage.
EU gas storage is just shy of 75% full. While we’ve had a couple of days of draws in October, winter storage draws have yet to fully get underway. The key question is whether these higher prices will destroy demand.
In power markets, we’re already deep into the gas-to-coal switching range. Industrial demand also shows signs of softening. Chemical company Yara recently reported curtailments of ammonia production in Europe due to high gas prices.
This led the company’s European gas consumption to fall more than 7% YoY in 3Q26. This trend is expected across European industry, especially with gas prices even higher now. Unsurprisingly, given the move in natural gas prices, investment funds increased their net long in TTF by 14.3TWh over the last reporting week to 207.4TWh.
Fresh buying drove the increase, with gross long rising by a little more than 20TWh, while gross short also edged higher. TTF Speculators Persian Gulf LNG European gas Energy prices Demand Content Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument.
Read more Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Author Warren Patterson Head of Commodities Strategy Warren Patterson is Head of Commodities strategy based in Singapore. He joined the bank in April 2016 and covers the entire commodities complex. Previously, he worked at a commodities trade house…
Sources & References
How we cover this story