Weekly Market View – w/c 3rd March, 2025
Market Drivers February 2025
Bearish Drivers
· Stable LNG supply to NWE in March with Europe remaining the premium market
· A small rise in Norwegian supply to NWE
· Geopolitical and regulatory uncertainty, mainly from ongoing peace talks and storage targets.
Bullish Drivers
· NWE aggregated storage inventory is forecast to end heating season at 26%
· Summer winter spread remains in backwardation
The European March 25 contract dropped 11% in February after a volatile start, hitting a two-year high of €58.04/MWh on February 10th due to bullish weather forecasts before falling as forecasts turned warmer. European gas stocks remain low, keeping the market sensitive to forecast changes. Softer weather expectations for March have weighed on short term markets, narrowing the TTF SUM25 premium over WIN25 to below €3/MWh from over €6/MWh in early February, which could discourage summer storage injections. Discussions about relaxing EU storage targets add further bearish risks.
March demand is expected to decline, with domestic consumption projected to drop by 24% month-on-month. Gas power demand is also lower compared to February but remains 22% higher year-on-year. Industrial demand is set to decrease, mainly due to reduced space heating needs. Meanwhile, supply is expected to strengthen, particularly with increased LNG shipments and higher Norwegian flows. The combination of weaker demand and strong supply is bearish for prices, with implied net storage withdrawals expected to fall significantly, leaving NWE storages at 26% fullness by the end of the heating season.
Longer-term storage projections remain unchanged, with maximum fill levels expected to reach around 74% by November 1st, below the current mandated targets. This has sustained the inverted Summer 25 – Winter 25 spread, though it has narrowed. A bullish outlook persists for Summer 25, but potential revisions or scrapping of storage targets by key EU countries pose a bearish risk. Geopolitical factors, particularly developments in Ukraine, could further influence price movements, with renewed tensions likely pushing prices toward the upper range.