European natural gas futures fell more than 5% to below €35/MWh on Monday, extending a 10% loss from the previous week and nearing their lowest levels since September 2024.
TTF prices extend losses to over six-month low
The decline was driven by mounting concerns that the ongoing global trade war, particularly the escalation between the U.S. and China, could sharply reduce industrial activity and lower gas demand. As tensions between the two largest economies in the world reached new heights, the market reacted negatively, fearing that the tariffs would create widespread economic disruptions. China's decision to impose a 34% tariff on all U.S. imports, mirroring the U.S. tariffs on Chinese goods, further fueled concerns about inflation, supply chain disruptions, and slower global economic growth.
These rising trade tensions could have significant consequences for energy-intensive industries in both the U.S. and Europe. As costs rise due to tariffs and inflationary pressures, many industrial companies could be forced to scale back operations or delay expansion plans, reducing overall energy consumption and lowering future gas demand. The uncertainty surrounding the long-term economic effects of these tariffs has led many market participants to revise down their expectations for energy needs in the coming months, which in turn has pressured gas prices lower.
Trump downplayed concerns about a potential recession
Despite these fears, President Trump downplayed concerns about a potential recession, maintaining that a market boom was imminent and that the U.S. economy would emerge stronger in the long run. His optimistic outlook, however, has done little to calm the markets, with investors skeptical of the administration’s ability to defuse the trade conflict in the short term. While Trump’s assurances about economic resilience might have reassured some, the overall market sentiment remains fragile, with growing apprehension about the trade war’s broader impact on global growth.
On the supply side, there are factors that could mitigate some of the downward pressure on European natural gas prices. Oil output is expected to rise from May onward, and changes to European storage targets could lead to an increase in gas supply, helping to stabilize prices. The ongoing shift in global energy trade patterns also plays a role in the dynamics of the natural gas market. Europe is likely to see more LNG (liquefied natural gas) shipments in the near term, as lower demand from China could lead to an oversupply of LNG in the global market. Weak Asian LNG consumption, particularly in 2025, could further ease pressure on European gas prices, as suppliers look to redirect excess shipments to the region.
Outlook in Europe may remain subdued
With gas storage levels already above average in many European countries and the prospect of additional LNG imports, the outlook for natural gas prices in Europe may remain subdued in the near term, despite the global economic uncertainties and geopolitical tensions. Traders and analysts are now closely monitoring both the trade war developments and the broader energy supply landscape to gauge how these factors will ultimately shape gas pricing in the coming months.
