In the fourth week of January 2025, TTF gas futures in the ICE market saw a steady rise, holding at nearly €48/MWh throughout the week. On January 20th, TTF gas futures reached their weekly low settlement price at €47.853/MWh, which was 2.1% higher than the last session of the previous week but 0.8% lower than the previous Monday, January 13th. The following day, January 21st, saw prices peak at €50.027/MWh, marking a 4.5% increase from the previous day and a 6.6% increase from the previous Tuesday, January 14th.
The benchmark Dutch TTF contract traded at an average price of €49.084/MWh during the week, signaling continued high levels for European natural gas. The market remains tense, with gas prices exceeding €50/MWh for the first time since the beginning of 2025, when prices hit €50.273/MWh on January 2nd. Concerns over gas storage levels are contributing to the market’s unease. As of January 20, EU gas storage was only 57.6% full, significantly lower than last year’s 74% and below the five-year average of 66%. The International Energy Agency (IEA) has raised alarms about the fragile balance of supply and demand, forecasting that higher fuel costs and the expansion of renewable energy sources may help mitigate increased demand. However, these factors will likely be offset by higher storage demands and the reduction in Russian pipeline deliveries.
Another factor driving gas prices upwards is an outage at the Freeport LNG export terminal in the US, which has been dealing with power issues and freezing weather conditions. Freeport, with a capacity of over 20 billion cubic meters (Bcm), stated that the plant would remain closed until power is restored.
As of press time, the one-month forward contract at TTF was priced at €49.450/MWh. High gas prices in Europe have prompted LNG tankers to divert from their original destinations and head to European ports, where traders seek to capitalize on the higher prices. In January, sending US LNG cargoes to Europe instead of Asia could result in up to $5.3 million in additional profits per shipment, according to data firm Spark Commodities.
At least seven LNG cargoes have altered their course from destinations like the Cape of Good Hope and Asia, choosing instead to head toward European ports. This shift highlights the significant impact of Russia’s ongoing conflict with Ukraine on Europe’s gas supply. Russia halted gas flows through Ukraine at the beginning of the month, and cold weather is accelerating the depletion of European gas storage at a rapid pace, reminiscent of the 2022 energy crisis.
The diverted vessels were carrying around 500,000 tonnes of LNG, which constitutes about 0.5% of the total LNG imports to Europe in 2024. Traders can change the course of their cargoes mid-voyage by either paying a fine to cancel the delivery or by sending another shipment to meet the original contract. Two of the diverted cargoes were en route to Türkiye, where LNG terminals in Greece and Türkiye have been able to redirect the gas into southeast Europe via pipeline, a region particularly impacted by the loss of Ukrainian gas transit.
With Russian gas supplies to Europe dwindling, the continent is becoming increasingly reliant on LNG imports to meet demand. The IEA forecasts that reduced Russian gas supplies will contribute to a 15% increase in Europe’s LNG imports in the coming months.