In January, prices surged by 38%! The cold wave and decrease in inventory resonated together, leading to the highest monthly increase in European natural gas prices in over 2 years.

The cold wave and rapid depletion of fuel stocks have disrupted market sentiment, with European natural gas prices expected to record their largest monthly increase in at least two years. As of the time of writing, the Dutch TTF natural gas futures price for delivery in March rose slightly by 0.5% to 38.77 euros per megawatt-hour. The benchmark futures edged higher on Friday, with a cumulative increase of about 38% for the month. This is the largest increase since the summer of 2023, and if the daily gains can be maintained, it could be the largest increase since the energy crisis four years ago. While concerns about supply have eased somewhat with the rebound in U.S. exports, cold weather is expected in parts of Europe in early February, leading to increased demand. The volatile natural gas market in Europe in January reflects concerns about the fragile fuel balance in Europe once again. In addition to increased natural gas consumption, winter storms in the U.S. temporarily disrupted some production facilities, leading to a surge in U.S. natural gas prices and exacerbating the rush of European traders to close out their previous short positions. Tensions in the Middle East have also helped drive the rise in natural gas prices. The analysts James Waddell and his team at the energy analysis company Energy Aspects pointed out in a report this week, "With inventory unusually low, the price risk remains skewed to the upside." They also noted that weather models have been unstable in recent weeks, contributing to increased volatility in natural gas prices. Traders are also closely monitoring the situation in Iran, with U.S. President Trump escalating threats against Iran, keeping the entire energy market on edge. Meanwhile, Trump announced on Thursday that he had reached an agreement with Russia to halt airstrikes on Ukraine for a week as the country braces for an extreme cold wave.