Price Dynamics and Key Influencing Factors

In August, the average natural gas price on the Dutch TTF exchange was EUR 53.29/MWh. This was 18.3% higher than in July, when the average price was EUR 45.05/MWh. Compared with August 2025, the natural gas price was approximately 19% higher; in August last year, it stood at EUR 33.85/MWh.

The increase in natural gas prices during the second half of the summer was driven by the geopolitical situation, concerns about the availability of LNG supplies, and the need to continue filling European gas storage facilities ahead of the heating season. Hot weather also contributed to additional demand during the summer, as did increased use of natural gas for electricity generation.

Latvia's Readiness for the Heating Season

Latvia's supply situation ahead of the 2026/2027 heating season is significantly influenced by the level of gas reserves in the Inčukalns Underground Gas Storage Facility (UGS). In mid-September, approximately 11.8 TWh of natural gas was stored in the facility, and injection operations were still ongoing.

Total natural gas consumption by Latvian users in 2025 amounted to 8.7 TWh. This means that the volume of gas stored at Inčukalns had already exceeded Latvia's total natural gas consumption for the whole of 2025.

However, these figures should not be interpreted as a direct guarantee that the gas currently stored will be sufficient for the entire heating season. Actual winter consumption depends on weather conditions, temperatures, electricity generation volumes, industrial demand, and other factors.

At the same time, the technical capacity of the Inčukalns UGS for the 2026/2027 storage cycle is 24.4 TWh, while the gas injection season continues until 14 October. Therefore, the volume of stored gas may still increase before the start of the heating season.

Outlook for Winter 2026/2027

The situation in the European gas market ahead of the winter of 2026/2027 is significantly tighter than at the beginning of the summer. In mid-September, the filling level of European gas storage facilities was approximately 67%, which is lower than in previous years and below the five-year average. On 20 September, storage facilities were approximately 67.6% full, compared with a five-year average of 79% for this date.

The global LNG market is adding further pressure. Europe has to compete with Asian buyers for LNG cargoes, while geopolitical risks and disruptions to supplies through the Strait of Hormuz have reduced the availability of some LNG supplies. Reuters notes that low European storage levels and tightness in the LNG market could create a significant risk of higher prices during the winter, particularly in the event of cold weather.

At the same time, lower storage levels do not in themselves indicate a physical natural gas supply crisis in Latvia. The European market is currently more diversified than in 2021/2022, and Europe has significantly greater LNG import capacity. In addition, natural gas consumption has declined in recent years.

Therefore, the key risk at present is not the physical unavailability of natural gas in Latvia, but rather higher prices and greater price volatility. If the winter is cold, European gas consumption will increase, while competition with Asian buyers for LNG supplies will also intensify. This could place additional upward pressure on TTF prices.

Forecast

The September natural gas price is currently estimated at around EUR 61.36/MWh, while the October price is forecast to approach EUR 80/MWh. On 20 September, market futures for October delivery indicated a price of approximately EUR 80.80/MWh, while November and December contracts were priced at EUR 80.62/MWh and EUR 80.37/MWh, respectively.

This indicates that, as the heating season approaches, the market is currently pricing in a higher price level than during the summer. At the same time, price developments will depend heavily on weather conditions, the pace at which European storage facilities are filled, LNG supply availability, and the geopolitical situation.

The main factors that may influence natural gas prices during the winter of 2026/2027 include:

• the level of European gas storage facilities ahead of the heating season;
• winter temperatures and natural gas demand for heating;
• the availability of LNG supplies in Europe;
• competition with Asian LNG buyers;
• the geopolitical situation and potential supply disruptions;
• the use of natural gas for electricity generation;
• LNG supply volumes from the United States and other LNG exporters;
• the level of gas reserves at the Inčukalns UGS and overall demand in the Baltic region.

Overall, Latvia is entering the heating season with a significant natural gas reserve at the Inčukalns UGS, exceeding the natural gas consumption of Latvian users in 2025. However, elevated price risks remain in the European market, and a cold winter, lower storage levels, or disruptions to LNG supplies could significantly increase natural gas prices.

Therefore, the Latvian market should also consider higher price levels and greater price volatility during the autumn, and winter compared with the summer period.