European natural gas futures climbed toward €58 per megawatt-hour on Monday, the highest level since January 2023, as colder weather accelerates the drawdown of regional storage. With freezing temperatures expected in Northwest Europe, heating demand is set to rise, fueling a rally that has dominated the market this year.
TTF prices rise to two-year high
Gas consumption is already straining stockpiles, which are at their lowest for this time of year since the 2022 energy crisis—just 49% full compared to 67% a year ago—raising concerns about summer replenishment and potential price volatility in the months ahead.
Low wind output has further increased reliance on gas, as weak renewable energy generation forces power grids to turn to fossil fuels. Additionally, maintenance at key Norwegian gas facilities has limited supply, exacerbating upward pressure on prices. Traders are also closely monitoring geopolitical risks, including ongoing tensions between Russia and Ukraine, which could further disrupt European energy flows.
US tariffs threat remain in focus
Meanwhile, potential disruptions from US tariffs remain in focus. Donald Trump plans a 25% tariff on all steel and aluminum imports and may target the EU, raising fears of retaliation. A trade dispute could drive up liquefied natural gas (LNG) costs, especially as the US remains Europe’s top supplier, accounting for over 40% of imports. Any escalation in trade tensions could strain transatlantic energy relations and add to uncertainty over LNG pricing and availability.
In response to tightening market conditions, European policymakers are exploring measures to ensure supply security, including extending coal plant operations and accelerating renewable investments. However, near-term risks remain high, with traders expecting continued volatility in gas prices as winter demand peaks and storage levels dwindle.
