European gas at its highest level in 3 years🚨

The start of the week brings further gains in energy commodity prices. European gas contracts are up more than 5%, moving above EUR 84, a level the market has not seen since early 2023.

Oil is also rising, by more than 2%. WTI is approaching USD 94 per barrel, while Brent has already broken above USD 106. US gas (NATGAS) is behaving differently, down about 1%.

• The main bullish factor remains disruptions to LNG supplies from the Middle East, amplified by the approaching heating season. According to Reuters, European gas storage may finish the injection season at only 75-78% full, around 10 percentage points below the five year average.
  • Importantly, the latest weather forecasts also point to a possible cool down in northwestern Europe in the second half of October.
• US gas: In contrast to the European market, Henry Hub contracts are losing value. Friday’s gains tied to Hurricane Isaias are fading as demand normalizes and expectations grow for production to be restored in the Gulf of Mexico.

The outlook for European gas remains particularly sensitive to changes in temperature forecasts. With limited inventories and ongoing LNG logistics issues, even relatively minor supply disruptions can trigger outsized price reactions. The market is increasingly pricing not only the risk of the coming winter, but also the cost of rebuilding inventories in 2027.

NATGAS.EU (D1)

Despite significant supply tensions, prices are struggling to break above the area around EUR 85. A pullback from current levels could imply weakening buying strength, with a potential target for the correction around EUR 70. For now, however, the price remains in a strong uptrend that could aim for the psychological level of EUR 100. If gains continue, it will be key to monitor RSI (14) to identify potential overbought conditions. Source: xStation5