European gas prices pared gains on the first trading day of the year
Gas gains in Europe pared gains despite Russian flows cut through Ukraine
European gas prices pared gains on the first trading day of the year, even as the region braced for bitter winter temperatures without a major source of supply.
Standard futures for the front-month rose 4.3% to 51 euros per megawatt hour, the highest since October 2023. Russian gas shipments via Ukraine were halted on Jan. 1 after a transit agreement between the warring countries expired without a replacement.
Storage drawdowns
Traders are watching to see if the loss of flows from Russia — a key supply source for several central European countries — will accelerate inventory drawdowns. Stockpiles across the continent are falling at the fastest pace since 2021, when the gas crisis began to take shape.
The shutdown coincides with forecasts of sub-zero temperatures in some countries, which will boost demand for heating. In Slovakia, one of the countries hardest hit by supply disruptions, temperatures could drop to minus 7 degrees Celsius by mid-January.
While Europe is unlikely to face a gas shortage this winter thanks to ample stocks and supplies from other sources, traders may struggle to replenish supplies for the next heating season. Gas prices for next summer have already risen above those for the winter of 2025-26, making replenishment more expensive.
“There is a growing risk that the EU will come out of the winter with low levels of gas stocks, making it expensive to replenish,” said Arne Lohmann Rasmussen, senior analyst at Global Risk Management in Copenhagen.
