Temperature levels control natural gas prices in Europe.

Natural gas prices in Europe have risen to their highest level in two years, as there has been an acceleration in withdrawals from storage facilities due to the drop in temperatures in the region. After contracts gained over four consecutive weeks, standard futures rose by about 4.1% on Monday, reaching 58 euros per megawatt-hour. This is the highest level since February 2023.

Forecasts indicate an intense cold wave that may hit northwestern Europe in the coming days, potentially boosting heating demand and adding further momentum to the ongoing price surge since the beginning of the year.

The increase in fuel consumption threatens to deplete inventories further, as cold weather and weak winds across Europe this winter have increased gas consumption and impacted renewable energy generation. Inventory levels are currently at only 49%, compared to 67% during the same period last year, making replenishment more challenging during the warmer months.