The market has continued trading in its recent range albeit towards the lower end with market participants wary of the upside risks. Temperatures across western Europe will fall next week, with some models pointing to colder conditions lasting until early January. Changes to the weather forecast continue to support prices even though supply prospects have recently improved, with imports of LNG increasing. Periods of cold and low-wind conditions have already caused Europe’s storage sites to withdraw faster than levels seen in recent years. EU storage facilities are now 84% full compared to 94% a year ago, potentially increasing demand in the summer. This has caused summer prices to increase in comparison to next winter. Geopolitical risks in the Middle East as well as expecting the end to Russian gas flows through Ukraine when a transit deal expires at the end of the year also adds further support. Whilst near term events are keeping prices elevated, those looking for some long-term certainty, will be glad to hear the curve is in backwardation with prices in 2026 and 2027 lower than those for 2025. If you are considering increasing cover levels, you may want to look at these periods.
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