FX.co ★ European Natural Gas Prices Climb Amid Bullish Shift

European natural gas futures experienced a significant surge of over 9%, reaching €35.7 per megawatt-hour this week. This increase comes in the backdrop of newly relaxed gas storage regulations, which have alleviated some fears regarding supply for the upcoming winter. The European Union has made a strategic decision to adjust the gas storage target from the existing 90% to 83% by November 1. This adjustment is considered more attainable, especially following the depletion of inventory due to last winter's severe cold. The sentiment in the market has improved, indicating that filling storage facilities might be more feasible despite persistent obstacles. However, the market atmosphere remains tense due to ongoing trade tensions and unpredictable demand. Although there is some optimism with the potential for partial trade agreements, volatility continues to be a concern. Currently, EU gas reserves are relatively low, at only 41.84% capacity, casting doubts on Europe’s preparedness for the next winter season without substantial imports from Russia. The EU's ambition to eliminate dependency on Russian gas by 2027 underscores the urgency of securing alternative energy sources, particularly from US liquefied natural gas (LNG). Nevertheless, the global race for resources, especially from Asian markets during heatwaves, continues to exert upward pressure on prices.