European natural gas prices have surged to an 18-month high, driven by fast-depleting gas inventories and concerns about future supply. In the first week of February 2025, TTF gas futures for March delivery rose significantly, surpassing €52/MWh. On Tuesday, February 4, TTF gas futures hit a weekly low of €52.048/MWh, which was 3.2% lower than the previous day, but 7.9% higher compared to Tuesday, January 28. Prices then climbed through the remainder of the week, reaching their weekly peak on Friday, February 7, at €55.723/MWh, up 2.2% from the previous day and 4.7% higher than Friday, January 31. This marked the highest price in 16 months, briefly surpassing €57/MWh in October 2023.
The spike in European natural gas prices above €55/MWh has been driven by colder temperatures across Europe, boosting demand for heating fuel. The increased consumption has put further strain on gas storage reserves, which were already significantly lower than the previous year. Meteorologists predict that temperatures in northwestern Europe will continue to drop, further depleting gas storage levels and intensifying withdrawals from storage facilities.
As of the latest update, the one-month forward contract for TTF gas was trading at €56.065/MWh. European gas storage levels had fallen below 50% by the weekend of February 4, a sharp decline from nearly 69% during the same period last year. This significant reduction in storage has been driven by the cold winter, which has led to higher demand for both heating and gas-fired power generation. According to European Gas Hub, if withdrawals continue at the 5-year average rate, storage levels could dip below 40% by the end of this heating season. To meet the 90% storage target for the next winter season, Europe would need to inject 55 bcm of gas into storage during the summer.
This situation means that EU storage injections could be 17 bcm higher than last year, while Russian piped gas imports are expected to drop by 15 bcm. Global LNG supply is projected to increase by only 25-30 bcm. Additionally, Ukraine’s gas storage levels are also trending toward historic lows, which will further raise Europe’s overall need for summer storage injections, potentially adding 2-4 bcm. As a result, Europe is expected to compete intensely for flexible LNG cargoes, with TTF prices likely to maintain a premium over JKM throughout the injection season and potentially beyond.
Despite the availability of ample supply, gas prices continue to climb. Norwegian gas exports have risen following the completion of maintenance work at the Njord field, and LNG shipments to Europe have remained stable. However, traders are cautious about potential disruptions in the market, especially with escalating trade tensions between the United States and China. Recently, Beijing imposed a 15% tariff on US LNG imports in retaliation to former President Donald Trump’s decision to introduce additional tariffs on Chinese goods.
