European natural gas futures dropped below €42/MWh on Wednesday, snapping a three-day winning streak, after Ukraine agreed to a U.S.-brokered 30-day ceasefire with Russia.
TTF prices snap three-day gaining streak
The move has raised hopes for a potential de-escalation of the conflict, increasing speculation that some Russian gas supplies could return to Europe, which continues to grapple with elevated energy costs. The news prompted a shift in market sentiment, with traders reassessing supply risks and the potential for reduced volatility in gas prices.
While the European Union has made significant efforts to diversify its energy sources since the start of the war, it still remains dependent on Russian liquefied natural gas (LNG). Unlike pipeline gas, LNG imports from Russia have not faced the same level of restrictions, as the EU prioritizes defense spending and economic stability over an outright ban. As a result, policymakers appear to be taking a more measured approach, focusing on long-term energy security rather than immediate supply cuts.
Europe remains well-stocked
Despite concerns over supply constraints, Europe remains well-stocked for now, having built up reserves ahead of winter. However, higher-than-expected gas consumption during the cold season has led to a rapid depletion of stored fuel, leaving EU gas storage levels below 36%. This raises fresh concerns about the region’s energy security, as lower reserves will likely increase Europe’s reliance on volatile LNG imports. Additionally, uncertainty over global LNG supply—particularly from key exporters such as the U.S. and Qatar—could leave the bloc exposed to price spikes and potential disruptions in the months ahead.
