European natural gas futures climbed 2% to €46 per megawatt-hour on Friday, following a notable 9% gain in the previous session. This rebound marks a recovery after a significant drop from a two-year high of €59 on February 10th, driven by a combination of market dynamics and geopolitical concerns.
TTF prices up for second session
Traders are seizing the opportunity to purchase natural gas, largely due to rising fears that a potential US-EU trade dispute could lead to higher LNG (liquefied natural gas) prices, especially since the US is Europe’s primary supplier of LNG. The situation escalated when former President Donald Trump threatened to impose 25% tariffs on EU imports, including cars, set to take effect on April 2. The prospect of such tariffs has heightened anxieties over potential disruptions in the flow of LNG to Europe, pushing traders to adjust their positions in anticipation of tighter supply.
Gas prices remain below February peak
Despite the recent uptick, gas prices remain more than 20% below their February peak, a decline largely attributed to mild weather across Europe, which has reduced heating demand, as well as the potential easing of EU storage mandates. Additionally, the ongoing peace talks in Ukraine, led by the US, have raised hopes for a de-escalation of the conflict, which could relieve some of the supply pressures on natural gas markets. However, with EU gas storage levels falling below 40%, a level seen as a precarious buffer heading into the next winter season, major European nations are considering relaxing storage requirements to help stabilize supply. This potential policy shift reflects growing concerns about maintaining adequate reserves as geopolitical and weather-related uncertainties persist.
Weekly performance
For the week, European natural gas prices are on track to see a modest increase after falling for two consecutive weeks, indicating a shift in sentiment as traders react to the evolving market and political landscape. This reflects a balance of factors, including the potential for higher LNG costs, ongoing supply chain vulnerabilities, and the general outlook for European energy security in the coming months. As such, while the market may have gained some ground recently, future price movements will continue to be shaped by a complex mix of economic, geopolitical, and environmental factors.
