Europe’s gas prices have fallen to the lowest level in 18 months due to rising supply and weaker demand.
Record exports of liquefied natural gas (LNG) from the United States and increased deliveries from Russia to Asia have eased global price pressures. US LNG shipments are on track to reach 10.7 million tonnes this November, 40% higher than the same month last year. Meanwhile, Russia exported 1.3 million tonnes of LNG to China in September, up 73% year-on-year, making it China’s third-largest supplier. Combined with Russian pipeline gas, total exports to China rose 37% to more than 4 billion cubic metres.
These developments have led to a surplus in Europe, where storage tanks are comfortably full. Gas Infrastructure Europe reports that storage currently sits at 77% of capacity, and 15 out of 19 EU countries have already begun drawing from reserves as the heating season progresses. Futures contracts on the TTF hub in the Netherlands fell to €28.85 per megawatt-hour on November 27, the lowest since May 2024, reflecting a 45% drop from the February peak. Analysts expect prices to remain under pressure despite minor fluctuations.
The decline is not only about supply. Demand is also weakening. Germany, the EU’s largest gas consumer, is using around 20% less gas than it did earlier this decade. Slower industrial activity in chemicals and automotive sectors, combined with a shift toward renewables and energy efficiency, has reduced consumption across Europe. The International Energy Agency forecasts that gas demand in OECD countries will drop nearly 10% by 2030, with European demand down 26% from 2021 levels.
For now, the market appears stable. Prices are increasingly determined by supply and demand rather than geopolitical tensions. Investors are betting on further price drops, with net short positions on the TTF reaching their highest level since March. While extreme winter weather or changes in Russian exports could disrupt the market, Europe is currently well supplied and adjusting to a new normal where gas prices reflect fundamentals more than politics.
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