LNG prices in Europe have dropped to their lowest levels in 18 months, thanks to surging supply and subdued demand across the continent.

As IntelliNews Lambda reports, our tool that marries AI analysis of our proprietary two decades of reporting with sophisticated mathematical modelling to produce predictive in-depth analysis, that has led to comfortably full gas tanks and the lowest deviation from the baseline in 15 years.

US LNG exports are on track to hit a record 10.7mn tonnes this November—40% higher than the same month last year—just as Russia also accelerates deliveries to China, which is keeping global price pressures down. Analysts say a supply glut, paired with waning consumption as Europe slides into recession, is reshaping the European energy market once again.

"Gas is getting cheaper because there is plenty of it and the market is no longer manipulated," noted one trader, reflecting a sentiment increasingly common in European energy circles.

On November 27, futures contracts on the TTF hub in the Netherlands—the continent’s benchmark—fell to €28.85 per MWh, the lowest since May 2024. That's a 45% drop from the February peak, and the clearest signal yet that Europe has weathered the once-feared supply shock caused by the collapse in Russian pipeline exports in 2022. At the start of this week, prices remained under €30 per MWh, and despite a minor uptick on Friday, analysts expect further downward pressure.

Robust supply

The key driver of the current price dynamics is an unprecedented surge in LNG deliveries. The US is not only exporting record volumes but plans to double its LNG output by 2030. Simultaneously, Russia is deepening its own LNG footprint in Asia to compensate for the loss of the European market. In September, it exported 1.299mn tonnes of LNG to China, up 73% year-on-year, making it China’s third-largest supplier behind Australia and Qatar.

Overall, Russian gas exports to China, including both pipeline gas and LNG, rose 37% year-on-year in September to 4.078bn cubic metres.

In Europe, the shift from Russian pipeline gas to diversified LNG imports is now structurally embedded. Under the nineteenth sanctions package the EU intends to ban imports of Russian LNG completely on January 1, 2027.

Storage levels remain relatively high—currently at 77.02% capacity according to Gas Infrastructure Europe – as EU countries take advantage of the lower prices to top up tanks ahead of the coldest part of winter. Heating season is well underway, and drawdowns have begun, with 15 out of 19 EU countries with underground storage now pulling gas to meet winter demand. (chart)

Despite falling inventories, prices remain under pressure. “The market has adjusted to the shift in supply from the East to the West,” said one analyst at Kyos, who added that the absence of Russian political interference in pricing has brought greater stability.

Demand: the missing piece

But strong supply alone doesn’t explain the price collapse. A more troubling trend is emerging on the demand side. Germany—the bloc’s largest gas consumer—is using around 20% less gas than it did at the beginning of the decade. Slowing industrial output, particularly in the chemical and automotive sectors, is weighing heavily on consumption.

According to the International Energy Agency (IEA), gas demand in OECD countries is projected to fall 10% by 2030, nearly 45bn cubic metres, with European demand down 26% from 2021 levels.

In the background is the structural shift to renewables and increased energy efficiency, as well as a broad economic malaise. “Gas prices reflect, among other things, the weakness of the European automotive industry,” one energy economist commented. These sectors, which rely heavily on gas as a feedstock or energy source, are downsizing, further suppressing demand.

Outlook: stable, for now

While a severe cold snap could yet jolt the market, most observers see little reason for alarm. The forward curve remains flat, and speculative investors are betting on further declines: net short positions on the TTF have reached 11.4 TWh, the highest since March.

A wildcard could be a return of Russian gas to global markets under a proposed 28-point peace plan (28PPP) brokered by the Trump administration. While such a development remains speculative, even the prospect adds to downward pressure on prices.

For now, Europe is well supplied, relatively calm, and adjusting to a new normal where the price of gas is driven more by fundamentals than by geopolitics. Whether that remains true through the depths of winter, however, is a question markets will continue to watch closely.