European natural gas futures extended their rebound past €41.5/MWh on Tuesday, recovering further from the five-month low of €37.8/MWh touched on March 6th, as colder weather forecasts and intensified Russian attacks on Ukraine heightened supply concerns.
EU natural gas rises For third session
Temperatures across Europe are expected to drop between March 12-18, potentially driving up heating demand and increasing gas consumption, particularly in Northern and Central Europe.
Meanwhile, geopolitical tensions escalated as Russian forces stormed Sudzha over the weekend, using a gas pipeline to launch a surprise attack on Ukrainian units. Sudzha houses critical gas transfer stations that once facilitated Russian gas transit to Europe, raising concerns about the security of remaining gas flows from Russia. A broader Russian assault on Ukraine’s energy infrastructure could further disrupt regional gas supplies, increasing Ukraine’s reliance on European markets at a time when gas storage levels are already below ideal levels for this point in the year.
EU gas storage sites are 36.8% full
According to Gas Infrastructure Europe, EU gas storage sites are currently 36.8% full, significantly lower than the levels seen in previous years at this time. With a refilling target of 90% by November 1st, policymakers and energy traders are increasingly focused on securing alternative supply sources. The EU has ramped up efforts to diversify imports, with higher LNG shipments from the US and Qatar playing a crucial role in balancing the market. However, logistical challenges and price volatility continue to pose risks, especially if storage injections are delayed due to increased demand or further disruptions.
EU may adjust policy
Additionally, the European Commission has hinted at potential policy adjustments to stabilize the market, including extending emergency measures aimed at price caps and coordinated gas purchasing agreements. With energy security remaining a top priority, traders are closely monitoring developments in Ukraine, weather patterns, and LNG import flows to assess potential price movements in the coming weeks.
