Natural gas prices in Europe have risen to their highest level in two years as lower temperatures accelerate the depletion of storage capacities in the region. Futures prices increased by as much as 4.1 percent on Monday to €58 per megawatt-hour (MWh), the highest since February 2023, according to Bloomberg.
Northwest Europe is preparing for low temperatures in the coming days, which could increase heating demand and add momentum to the rise that has dominated the year so far. Higher fuel consumption risks further depleting supplies, which are already at their lowest level for this time of year since the energy crisis of 2022.
Cold winds across Europe have increased gas consumption this winter and strained renewable energy production. Supplies are only 49 percent full compared to 67 percent at the same time last year, making it difficult to replenish them during the warmer months.
– The risk that the European Union will enter spring with very low gas supplies has increased in recent weeks – said Arne Lohmann Rasmussen, chief analyst at Global Risk Management.
Anticipation of U.S. Tariffs
In a sign of rising prices dominating the market, gas options indicate that traders are rushing to hedge against rising European gas prices, signaling that they expect new supply disruptions ahead of the stockpiling season.
Traders are also closely monitoring the impact of U.S. tariffs and threats to global trading partners. President Donald Trump plans to impose tariffs of 25 percent on all steel and aluminum imports into the U.S. and is also considering import tariffs for the EU. An escalation of ‘tit for tat’ could risk increasing the cost of imported liquefied natural gas, for which the U.S. is the largest supplier to Europe.
