European gas prices reached their lowest levels in two months by the end of February 2025, driven by optimism surrounding Ukraine peace negotiations and slight improvements in gas reserves. The April Dutch TTF futures contract dropped to €41.544/MWh, falling from a two-year high of €57.77/MWh in mid-February. A strong increase in LNG supply from the United States, discussions on easing storage targets in the coming years, and the push for a ceasefire in Ukraine contributed to the decline in benchmark gas prices.
During the last week of February, TTF gas futures for April 2025 fell below €50/MWh for most of the week. On February 24, the contract hit its weekly peak at €47.339/MWh, marking a small decrease of -0.2% from the previous session. Prices continued to drop over the week, with the lowest settlement price recorded on February 26 at €41.544/MWh, down -6.6% from the day before and -14.3% from the previous Wednesday. The weekly average stood at €44.566/MWh, reflecting a -12.2% decrease compared to Week 08.
The sharp price drop on February 26 marked the lowest level in more than two months. Market analysts attributed this to a combination of factors, including easing concerns about European gas storage levels and progress in ceasefire discussions between Russia and Ukraine. Optimism surrounding a potential diplomatic resolution to the Ukraine conflict, especially after a key phone call between Donald Trump and Vladimir Putin, has also played a role in the price drop. The possibility of a partial resumption of Russian gas exports further contributed to the easing of market tensions.
In addition, the slight improvement in temperatures has reduced pressure on European gas stocks, slowing the decline in reserves. Amid these developments, German energy companies have urged the government to revise the EU’s gas storage target for the upcoming winter, from the current 90% to 80%, to ease market pressures and better reflect current market conditions.
By the end of February, European natural gas prices had experienced their largest decline in a year, accompanied by record trading volumes as market players adjusted their expectations. The uncertainty surrounding the war in Ukraine, particularly regarding gas supply dynamics, combined with the European Union’s efforts to replenish gas inventories, continued to impact prices.
As of the latest update, the one-month forward contract at TTF was trading at €43.560/MWh. Meanwhile, Ukraine is expected to ramp up natural gas imports due to damage to its domestic production facilities, potentially adding pressure to an already tight European market. Ukraine will likely need to import approximately 3.5 billion cubic meters (Bcm) of gas to meet its domestic demand, although the actual volume could vary depending on market conditions.
Bloomberg analysts have warned that Ukraine’s import strategy could exacerbate the already fragile energy market in Europe, increasing supply volatility. In February 2025, Ukraine significantly boosted gas imports, marking the highest monthly intake in the past 18 months. By the end of the month, Ukraine’s Naftogaz acknowledged the challenges posed by damage to domestic production facilities, adding uncertainty to the market.
As the war in Ukraine enters its third year, EU Member States remain heavily reliant on Russian fossil fuels, as shown by recent energy market trends.
