European Natural Gas Prices Dip Slightly but Remain Elevated Due to Weather and Supply Issues

European natural gas prices showed a slight decline in early trading but continue to remain high overall throughout the month. This situation is largely driven by colder weather forecasts and concerns over supply following Russia's suspension of gas transit through Ukraine.

The benchmark Dutch TTF contract is trading around 49 euros per megawatt-hour, down 1.2%. Last week, it surpassed the 50 euro mark after confirmation that Russia's pipeline flows had ceased due to the expiration of Gazprom's transit agreement.

Analysts at ING noted that the European gas market is receiving additional support from forecasts of colder-than-normal weather for the next two weeks. This could lead to a faster-than-expected decline in storage levels.

Analysts also stated that current storage levels should be sufficient for Europe to weather this winter comfortably, but the task of refilling the storage facilities during the injection season could be more challenging than last year.