Brief: TTF Jumps As EU Storage Plummets

Mobius Intel Brief:

The front of the Dutch TTF forward curve jumped 8% W/W to over $15/MMBtu today as existing supply fears from reduced Russian pipeline gas gained support from the largest weekly withdrawal in EU gas storage since February 2021.

Key Intel

• EU gas in storage has depleted at the third-fastest rate in the last 14 years despite relatively mild temperatures for most of December and early January. Depletions have proceeded at a rapid pace in recent weeks as low wind generation compounded the effects of shifting supply routes as the region adapts to a new era without Russian pipeline gas flows.

• The latest data for Jan 22 shows EU gas in storage declined by 224 Bcf W/W — the largest one-week change since February 2021.

• Aggregate EU gas inventories declined by over 1,436 Bcf between October 1 and January 22—an absolute level only surpassed by withdrawal seasons 2020-2021 (-1,479 Bcf) and 2016-2017 (-1,614 Bcf). Aggregate EU gas inventories dropped below 58% of total capacity on January 22 from over 95% as late as November 1.

• Extended bouts of low wind speeds have added incremental pressure on EU gas inventories to offset any bearish demand impacts from mild temperatures. These effects are most apparent in Germany, where wind generation as a share of total load fell from an average of over 50% in the first week of January to an average of less than 16% over the past seven days. This volatility has inverted Germany’s reliance on thermal generation from coal and natural gas, raising combined coal+gas generation as a share of load to an average of 63% this week from 31% in the first seven days of January.

• Rapid depletions during the first season without substantial Russian pipeline gas has magnified the bloc’s supply concerns for winter ‘25-’26. On Tuesday, these fears prompted Germany’s Trading Hub Europe (THE) to seek additional subsidies from the German economy ministry to incentivize injections or new storage facilities. Front-month TTF jumped over 6% following the publication of this information on THE’s website (translated deck below).

Looking Ahead

Germany faces a consequential Feb 23 election to determine who will form and lead a new government following the collapse of Chancellor Scholz’s ‘Traffic Light Coalition’ late last year. Leading opposition candidates are strong proponents of adding new gas-fired generation and restarting Germany’s retired nuclear reactor fleet. An opposition victory alongside President Trump’s carrot/stick tariff threats will likely support the prioritization of US energy supplies in Germany and the broader EU over competitive cargoes via Qatar.

The EU’s latest 15-day forecast remains milder than normal through days 1-10 before shifting to cooler temperatures in the 11-15 day range. The European gas market will be observing model runs closely for a transition into a material cold spell in the first weeks without Russian pipeline flows.

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