The European benchmark gas price (TTF) has risen to about EUR 33 per MWh. This increase is due to forecasts predicting colder temperatures next month, raising worries about gas storage levels. Although storage has improved since spring, it is still below previous years’ levels. Heating demand is expected to rise, and gas supplies from Norway, a key supplier to the EU, are decreasing because of maintenance work. According to GIE data, gas storage refilling is nearly stalled, with only a slight increase from 82.5% to 82.75% last week. In September, storage levels had been rising by more than one percentage point each week. However, Germany has seen a small drop in storage, from 76.7% to 76.3%. The rise in European gas prices to nearly €33 per MWh shows the market is now focused on winter supply challenges. Predictions of colder weather are prompting an early start to the heating season. This shift suggests a more positive outlook, signaling a good time to reconsider short positions. As we head into this colder season, the buffer for gas supplies is weaker than we’ve grown used to in recent years. EU gas storage is at 82.75%, which is concerning compared to early October 2023, when storage was above 95%. This smaller buffer means that any unexpected supply issues or lengthy cold spells could significantly impact prices. The supply situation appears fragile, with lower gas flows from Norway due to maintenance. German storage levels dipping from 76.7% to 76.3% demonstrate that withdrawals are starting earlier than usual. This change indicates that the market’s supply-demand balance is tightening more quickly than expected. Given this situation, call options on front-month and Q1 2026 TTF futures contracts are becoming more attractive. The winter of 2022 showed how swiftly prices can react to supply concerns, and with lower storage levels now, the risk premium for winter delivery is likely to increase sharply. Traders should watch for opportunities in calendar spreads since a chilly November could lead to notable price differences between near-term and future contracts.

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