Europe Faces Early Winter Stress Test As Cold Snap Looms, NatGas Prices Near Triple Digits

US natural gas futures have fallen to levels last seen in April as unusually warm weather across the Lower 48 suppresses heating demand, potentially reflecting El Niño's weather-related influence. Europe faces a much different outlook: a cold snap forecast for next week has helped push benchmark TTF NatGas prices toward 100 euros per megawatt-hour, highlighting the widening split between the two energy markets.

Bloomberg reports that temperatures across parts of continental Europe are forecast to fall 2C to 3C below normal from the weekend, while northeastern China, Japan and South Korea face a new round of cold weather, with temperatures well below seasonal averages.

The forecasts follow TTF's climb above 97 euros per megawatt-hour on Monday for the first time since the 2022 energy crisis.

The region's storage facilities are just 75% full, compared with a 10-year average of around 90% for this time of year.

Last Thursday, Gas Infrastructure Europe data showed that EU natural gas inventories declined for the first time this year. This is troubling because the EU has entered the withdrawal period with seasonally low inventories, leaving limited buffers to shield the continent from back-to-back cold blasts.

The smaller buffer leaves Europe increasingly dependent on the international market, where it must compete with Asian buyers. This suggests TTF prices will have to rise sharply as the Hormuz maritime chokepoint remains chaotic.

What markets likely fear most heading into winter is "joint cold across multiple high-energy-demand regions," said Andrew Pedrini, a meteorologist at Atmospheric G2.

Across the Atlantic, US natural gas futures have plunged in recent weeks to their lowest level since April amid warmer weather trends across the Lower 48.

Commodity Weather Group expects US October and November combined to be the third-warmest such period since records began in 1950, reinforcing expectations for a mild winter driven by El Niño.