European natural gas futures hovered around €40/MWh, fluctuating near a three-week low as the heating season comes to an end and traders shift their focus to replenishing storage ahead of next winter. While the arrival of mild spring temperatures is expected to facilitate early gas injections, lingering market concerns persist over storage adequacy and price volatility.
TTF prices fluctuate as storage challenges loom
This winter’s prolonged cold snap led to a faster-than-expected depletion of reserves, leaving European storage facilities approximately 33% full. However, the usual economic incentives for traders to stockpile gas have weakened, as elevated summer gas prices have made storage less attractive. This has fueled uncertainty over whether refilling efforts will proceed smoothly or require policy intervention. In response, some EU nations are advocating for more flexible storage targets to mitigate price pressures and supply risks, adding another layer of volatility to the market.
Geopolitical tensions continue to cast a shadow
Meanwhile, geopolitical tensions continue to cast a shadow over the European gas market. Ukraine faces increased import needs following significant damage to its energy infrastructure, while the outlook for renewed Russian gas flows remains highly uncertain. Alternative supply routes, including LNG shipments from the U.S. and Qatar, will be critical in offsetting these risks, but competition from Asian buyers and fluctuating global demand could complicate efforts.
Despite these challenges, European natural gas prices have dropped by about 18% in Q1 2025, reflecting a temporary easing in supply concerns. However, prices remain approximately 50% higher than a year ago, and analysts suggest they may need to stay elevated to attract sufficient LNG imports and ensure adequate stockpiling ahead of the next heating season.
