European natural gas futures dropped to €36/MWh on Monday, extending their downward trend as gas inventories across the continent surpassed the 50% capacity threshold—a critical milestone in the 2025 refill season.
TTF prices fall as inventories hit 50%
The milestone marks significant progress after Europe exited the 2024–25 winter heating season with storage levels at just 33.5%, well below the 55% average of the previous two years. Despite the current improvement, analysts warn that Europe still faces a challenging path to meet its target of 90% storage capacity by November, particularly in the absence of stable pipeline flows from Russia.
The end of the Ukraine gas transit agreement has sharply curtailed Russian pipeline deliveries to Europe, forcing the region to depend more heavily on liquefied natural gas (LNG) imports. So far, this strategy has been aided by tepid demand from Asia, especially China, where industrial activity remains subdued due to a slowing manufacturing sector and ongoing trade tensions with the United States. Seasonal patterns have also played a role: the onset of Asia’s monsoon season has led to reduced regional energy consumption, freeing up LNG cargoes that have been redirected to Europe.
However, supply-side challenges persist. Planned maintenance outages in Norway—Europe’s largest gas producer—have temporarily constrained output, creating short-term volatility in the spot market. In addition, LNG procurement remains exposed to shipping disruptions and competition from Asian buyers if demand unexpectedly rebounds, especially later in the summer or during extreme weather events.
Potential outlook
Looking ahead, gas demand in Europe is expected to moderate further as warmer temperatures reduce heating requirements and renewable energy generation, particularly from wind and solar, ramps up in the summer months. Industrial demand, however, remains fragile amid weak economic data from Germany and other core economies, further suppressing overall consumption.
While the near-term outlook remains bearish, market participants remain cautious. Geopolitical risks, particularly in the Middle East and around global shipping routes, as well as unexpected spikes in global demand, could quickly tighten the market. For now, ample storage progress and favorable LNG dynamics continue to provide a buffer, helping stabilize prices well below the crisis levels seen in 2022 and early 2023.
