European natural gas futures surged to €51 per megawatt-hour, the highest level since October 2023, before slightly retreating to €50.
European gas prices surge amid supply disruptions
This price spike comes as Europe experiences freezing temperatures amid the disruption of a crucial gas supply route. Russian gas flows via Ukraine ceased on New Year’s Day following the expiration of a transit deal, leaving no immediate replacement and raising concerns about rapid storage withdrawals. Gas inventories, already depleting at their fastest rate since 2021, are under increasing pressure as sub-zero temperatures across Europe drive up heating demand. While Europe is expected to have sufficient gas for this winter, refilling reserves next season could prove costly.
Rising LNG dependence and Asia's demand strain global gas supply
A growing reliance on liquefied natural gas (LNG), including expensive imports for landlocked countries, further compounds the situation, mainly as Asia's summer demand puts additional strain on global supply.
