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Natural gas prices have jumped in recent weeks in all major consuming markets, including in the United States, where prices have soared by more than 160% from this time last year.
Colder winters in North America and Europe have erased all the surplus inventories stockpiled after the previous two milder winters.
In Europe, the end of the Russian gas transit flows via Ukraine stopped on January 1, prompting the continent to buy more LNG and prepare for a more intense refill season between April and October, as inventories are currently about 35% lower compared to February 2024.
In the United States, cold snaps in both January and February boosted demand for heating and power generation. Higher consumption combined with lower output of the past few months when natural gas firms were curtailing production in response to multi-year low prices early last year. Record-high levels of gas flows to LNG export plants and above-average withdrawals from storage also fueled the natural gas price rally.
Going forward, prices in both the U.S. and Europe are set to remain high even after the end of the heating season in the northern hemisphere, as Europe will need to stock up much larger volumes of gas ahead of the next winter. And most of this will come from LNG imports, mostly from the U.S.
Dutch TTF Natural Gas Futures, the benchmark for Europe’s gas trading, have eased in the past week, but they hit a two-year high earlier this month. The first proper winter in Europe with prolonged periods of cold snaps since the 2022 energy crisis is depleting the EU stockpiles of natural gas, which have dropped to the lowest level since the crisis for this time of the year.
Europe’s gas prices remain high despite the pullback in the most recent week amid speculation about the end of the war in Ukraine. Prices in the forward curve for the summer months are also much higher than in the past two years, as depleted stocks mean more efforts are needed to refill storage levels ahead of the 2025/2026 winter.
As of February 22, gas storage levels across the EU were 40% full, per data from Gas Infrastructure Europe. That’s much lower than about 60% full storage capacity at the same time last year.
Stronger than usual demand in Europe to refill inventories ahead of November 1, 2025, is expected to support prices throughout the summer and extend the current tightness in global natural gas markets.
“Meeting EU targets for filling storage before the start of next winter will require much bigger inflows of gas than in the previous two years, increasing Europe’s call on global LNG markets and tightening market fundamentals,” the International Energy Agency (IEA) said in a commentary last week.
In the United States, natural gas prices have been surging this year on Arctic cold snaps and bigger-than-normal withdrawals from storage. Extremely cold temperatures have also led to freeze-offs in some gas-producing areas, further tightening the supply-demand balance. Add to this record-high exports of LNG, and natural gas prices have become the hottest commodity in the U.S. so far this year. Over the past year, natural gas prices have surged by 160% since February 2024, with most of the gains in the past three winter months.
Net withdrawals from storage have been above-average for the past few weeks, and by the week ending February 19, working natural gas stocks were 5% lower than the five-year average and 16% lower than last year at this time, the latest weekly data from the U.S. Energy Information Administration (EIA) showed.
Due to increased consumption and relatively flat production in the remainder of the first quarter of 2025, the EIA expects natural gas inventories at the end of the withdrawal season on March 31 to be 4% below the five-year average.
That would lend further support to natural gas prices, which would be welcome news for gas producers to boost output after a year of curtailments in response to the 2024 multi-year low price levels.
The post Natural Gas Prices Surged 160%—And They’re Not Coming Down Soon appeared first on Energy News Beat.
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