Gas prices in Europe have surged to a two-year high as the region’s cold weather has led to a significant increase in demand. According to Bloomberg, gas prices rose by as much as 5.4% on February 10 to 58.75 euros per megawatt-hour. The news agency reported that the prices have been rising steadily since February 2023.
The forecast of eisige temperatures in the coming days in the northwest European countries is expected to further drive up prices, analysts say. The high energy consumption has led to a decline in the underground storage levels, which are already at the lowest level for this time of the year since the energy crisis of 2022. The current storage levels stand at 49%, compared to 67% at the beginning of February 2024.
Arne Lohmann Rasmussen, chief analyst at Global Risk Management, expects the EU’s gas storage levels to be at a “very low” level by the spring. Meanwhile, market players are also observing the impact of US President Donald Trump’s measures on the market. Trump plans to impose a 25% tariff on steel and aluminum and if the EU responds with counter-tariffs, it could lead to an increase in the prices of liquefied natural gas (LNG), the largest supplier of which to Europe is the US, according to Bloomberg.
The LNG imports from the United States have increased, following the discontinuation of Russian gas transit to Europe through Ukraine on January 1, as the contract between Gazprom and Naftogaz expired. Of the 8.46 million tons of LNG sold by the US in January, 7.25 million tons or 86% were shipped to Europe, compared to 5.84 million tons or 69% in December 2024, the London Stock Exchange Group reported.