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Natural gas prices: Europe cuts demand as soaring costs deter consumption

By Angela Barnes

11:57, 6 December 2022

Illustration of gas prices going up in the European Union
Analysts share their natural gas price predictions for 2023 – Photo: Getty

Europe has been under pressure to cut its natural gas demand to reduce its reliance on Russian energy and it seems to be on track - despite the colder-than-normal weather forecasts for northwest Europe over the next two weeks.

It comes as analysts are predicting that higher prices are on the cards for 2023. Read on to find out what the market specialists think.

US natural gas price chart 

Firstly, at the time of writing on Tuesday 6 December, the price of natural gas on the Dutch Title Transfer Facility (TTF) was trading up 2% at €138/MWh on the colder weather outlook, thus higher heating demand expectations, while US natural gas was trading down by 8% to below $5.8 MMBtu, on expectations of milder weather for the next couple of weeks.

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EU cuts its natural gas demand 

According to data from European think tank Bruegel, EU natural gas demand in October 2022 was 25% down for the selection of EU countries with already available data, while in summer months, most of the reduction was driven by industry.

“In October, there was significant reductions to household demand. This was strongly driven by warmer than average weather,” the group said in a report.

It comes after the EU had agreed a target to reduce gas demand by 15% from August 2022 to March 2023.

Higher natural gas prices have ensured a significant amount of that demand destruction – and as a result, the European Commission has been able to stick to its voluntary demand cut rather than having to impose a mandatory one.

However, Warren Patterson, head of commodities strategy at ING, highlighted in a report sent to clients that Europe will need to see continued demand destruction through 2023 to ensure adequate supply for the 2023/24 winter. 

“This is particularly the case given the risk that we see further declines in Russian gas supply to the EU,” he said.

Limited LNG supply growth

Patterson also noted in his 2023 commodities outlook that the liquefied natural gas (LNG) market has helped Europe significantly this year. 

“LNG imports into the EU over October grew by almost 70% YoY, with volumes exceeding 9bcm.” 

However, he noted that there are constraints to how much more LNG Europe can import. 


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“There are reports that LNG carriers are queuing for spots at regasification units. This highlights the lack of regas capacity in Europe at the moment. This queue of LNG carriers could also be partly due to market players wanting to take advantage of the significant contango in the front end of the TTF curve.

“The EU has seen the start-up of a fair amount of regasification capacity in the form of floating storage regasification units (FSRUs) over the second half of this year. The Netherlands, Germany, Finland/Estonia have or are in the process of starting up operations at these FSRUs with a combined capacity in the region of 23-27bcm. Germany is expected to bring a further 15bcm of regas capacity online early next year. This will help with some of the infrastructure constraints Europe is facing, but the issue is also around global LNG supply and the limited capacity which is expected to start next year,” he added.

Another issue for the EU is competition for LNG.

China’s lockdowns have helped Europe this year as it weakened demand with LNG imports down 22% year-on-year over the first 10 months of 2023. 

However, Patterson also highlighted that if we see a recovery in Chinese demand in 2023, Europe will have to compete more aggressively for supply.

Natural gas price outlook for 2023

The prediction from ING’s head of commodities is that prices will get higher next year - with a forecast of €150 mwh for the first quarter of 2023 for natural gas on the TTF, rising to €220 by Q4, while US natural gas has been forecast to trade at $6.5 MMBtu on the Henry Hub in Q1 – dropping to $4.7 by Q4.

Piero Cingari, market specialist at, shared his outlook for US natural gas prices on Monday 5 December.

“If the conflict in Ukraine continues, it's quite unlikely that prices would fall back to the $4.3 level, which is the area at which they traded on February 24, 2022, when Russia invaded Ukraine. As a result, bulls may resurface on dips between $5 and $5.30.

“Looking at the upside, the insane price levels witnessed in the summer of $9.5 or more are also unlikely to retest, since they correspond to an unprecedented supply crisis in Europe which caused a jump in US domestic prices due to higher LNG exports,” Cingari said.

The market specialist noted that a sideways market trend with prices ranging from $5 to $8 appears to be a probable scenario for US natural gas in the first quarter of 2023. 

“The bullish market phase may occur after the first months of next year when gas reserves in Western economies begin to dwindle and demand for refilling stocks resumes its cyclical comeback,” he added.

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