The analysis from UBS indicates that the risk premium associated with European gas has decreased due to a stable supply from Russia. This has led to a significant decline in TTF futures prices.
European gas storage levels are currently at 81%, which is in line with the five-year average but lower than the same period last year. The rate of net withdrawals from storage has increased, driven by colder temperatures and a slowdown in LNG imports. Despite this, storage levels are projected to end the winter season above the five-year average.
European gas demand increased in November due to colder weather conditions, particularly in the power sector. Industrial demand also rose, but it still fell short compared to the previous year.
Piped gas imports into Europe remained stable, with Norwegian supplies holding steady and Russian imports experiencing a slight decline due to a contractual dispute. However, imports through alternative routes remained stable.
Analysts project that European gas prices will stabilize in the low to mid-€40 range, but uncertainties surrounding geopolitical factors and contractual disputes could still pose risks to the market.
As Europe adapts to changing energy demands and supply challenges, the focus will likely be on enhancing energy security and diversifying supply sources.