European natural gas prices consolidated on Thursday, with the benchmark Dutch Title Transfer Facility (TTF) trading close to 44 euros per megawatt-hour. This level follows a significant 15% decline recorded on Wednesday, as market participants assessed evolving supply risks and logistical challenges.
EU Downplays Immediate Supply Threat
The European Commission's gas coordination group indicated no immediate threat to natural gas supplies stemming from geopolitical tensions, providing a measure of calm to the market. Officials emphasized that the current focus is on the seasonal storage refill period, with a mandatory EU target of filling storage facilities to 80% capacity by November. An EU source advised that beginning injections early could help avoid a late-summer supply scramble.
Analyst Forecasts Revised Lower
Investment bank Goldman Sachs adjusted its second-quarter outlook for the TTF benchmark, lowering its price forecast to 50 euros per MWh from a previous estimate of 70 euros. The revision anticipates a normalization of liquefied natural gas (LNG) shipments transiting the Strait of Hormuz by mid-April. However, the bank cautioned that prices could surge back above 75 euros if shipping holdups continue or if production facilities face more severe disruptions than currently expected.
Qatar Moves to Restart LNG Trains
Supply-side pressures showed tentative signs of easing. QatarEnergy has resumed operations at two of the three production trains at its QELNG North 1 facility, according to a Reuters source. The third train remains offline. A full restart of the facility's capacity is contingent upon the resumption of normal shipping traffic through the critical Strait of Hormuz.
A Logistics Crisis, Not a Supply Crisis
Menelaos Ydreos, Secretary General of the International Gas Union, framed the recent market turmoil as a breakdown in logistics rather than a physical shortage of fuel. "This was not a supply crisis. This was a supply chain crisis," he stated. He highlighted that approximately 20% of global LNG typically passes through the Strait of Hormuz. The diversion of cargoes to chase higher prices has disproportionately impacted price-sensitive buyers in Asia.
Asian Energy Squeeze Continues
The supply chain disruption continues to strain Asian markets. India's GAIL purchased three spot LNG cargoes to address shortages, with a company official noting its Dabhol terminal is operating at only 2.25 million tonnes per year, far below its 5 million-tonne capacity. Separately, Hindustan Petroleum has reportedly struggled to secure shipments for its Chhara LNG terminal.
Shipping Traffic Remains Severely Depressed
Data on Thursday revealed a stark picture of the ongoing shipping disruption. Only seven vessels transited the Strait of Hormuz in the preceding 24 hours, a figure that normally averages around 140 daily. This represents less than 10% of typical traffic volumes, indicating that the logistical backlog is far from cleared.
Torbjorn Soltvedt of Verisk Maplecroft noted, "Most shipping lines are likely to remain cautious, and two weeks will not be enough to clear the backlog." This persistent bottleneck raises the risk of another price surge coinciding with the start of Europe's winter stockpiling efforts.
Market Outlook Hinges on Shipping and Output
While Brussels maintains a composed stance, market traders are closely monitoring two key factors: increased Qatari LNG output and unobstructed maritime transit. Progress on both fronts could exert downward pressure on TTF prices. Conversely, if relief stalls, the pressing need to build storage inventories may begin to provide underlying support for natural gas prices in the region.
