One question that we would all like to know the answer to is when will European gas prices come back down again?

A forward curve is not always a reliable indicator of what will happen in the future, but it does give us some insight into how the market is viewing things today.

The below chart shows a comparison of the Dutch TTF Gas forward curve (often seen as a European gas price benchmark) on 17th October 2018 with how it looks 4 years later on 17th October 2022. 4 years ago the curve showed the typical seasonality, oscillating nicely between higher prices in the winter and lower prices in the summer in the predictable manner to which we had become accustomed, prices were roughly in the 20 to 25 EUR/MWH range.

Today we are seeing highly elevated prices for this coming winter and continuing throughout 2023. We then see sharp drops in the forward price at the beginning of 2024, 2025 and again in 2026 where the curve flattens and settles around the 45 EUR/MWH mark.

Source: S&P Global Totem Daily Commodities Service

Posted 18 October 2022 by Joel Walker, Executive Director, Pricing Valuations & Reference Data , S&P Global Market Intelligence

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This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.