European natural gas futures surged 10% in May to €35.2 per megawatt-hour (MWh), marking a sharp rebound after three consecutive months of declines. The price spike reflects a confluence of geopolitical tensions, supply constraints, and shifting global energy flows, all of which have reignited concerns about Europe's energy security heading into the latter half of the year.
TTF prices rebound 10% in May
Hopes for a return of Russian gas to European markets have largely dissipated as the war in Ukraine shows no signs of de-escalation. Diplomatic efforts have failed to produce meaningful progress, and ongoing hostilities have reinforced the perception that Russian pipeline gas will remain off-limits for the foreseeable future. Meanwhile, European governments, led by Germany, continue to double down on strategies aimed at permanently reducing dependency on Russian energy. Germany, in particular, has reiterated its firm opposition to resuming flows through the Nord Stream pipelines, citing long-term security concerns and a commitment to diversifying its energy mix.
On the supply side, seasonal maintenance work in Norway—now Europe’s largest single gas supplier—has temporarily tightened flows, adding upward pressure on prices. Norway’s critical role in maintaining regional supply has left the market highly sensitive to any disruptions, even those deemed routine. In parallel, liquefied natural gas (LNG) shipments are increasingly being redirected away from Europe, with more cargoes now heading toward the Middle East and Asia, where demand is rising amid early summer heatwaves and economic recovery in several countries. The redirection of LNG is further complicating Europe’s efforts to rebuild storage inventories ahead of the high-demand winter season.
Storage refill rates lag behind seasonal averages
Compounding the situation, European storage refill rates are currently lagging behind seasonal averages, prompting fears that inventories may not be sufficiently replenished in time to meet winter heating and industrial needs. Analysts warn that if supply tightness persists through the summer, prices could spike further in the coming months, increasing the cost burden on consumers and businesses.
In contrast, the previous month saw a sharp 20% drop in gas prices, primarily driven by macroeconomic fears and a sharp dip in risk sentiment amid growing tensions around a potential U.S.-led global trade war. The reinstatement of former President Donald Trump’s tariffs by a federal appeals court in late May has only amplified the uncertainty, with potential ripple effects for energy markets if broader global demand is negatively impacted.
Overall, the May rebound in gas prices underscores the fragility of Europe’s energy landscape, where geopolitical risks, supply bottlenecks, and global competition for LNG continue to interact in complex ways. Market participants will be closely monitoring geopolitical developments, weather patterns, and supply-side dynamics as they position for what could be another volatile energy season.
