European gas prices rose on the first trading day of the year after the loss of a key supply route, freezing temperatures in the north of the region and an unplanned outage in Norway.
European natural gas futures climbed to €51 per megawatt-hour, the highest since October 2023, before easing to €50 as the region faces freezing temperatures without a key supply route, according to Trading Economics.
Liquefied natural gas (LNG) futures rose to close at their highest since October 2023 on Thursday. Russian gas deliveries via Ukraine were halted on New Year’s Day after a transit contract between the warring countries expired, leaving no alternative.
In addition, the Hammerfest LNG terminal in Norway has halted operations until January 9 due to a compressor failure, grid operator Gasco AS said.
The supply squeeze this week could lead to faster withdrawals from storage sites that act as a buffer. Stockpiles across the continent are already falling at the fastest pace since 2021, when the gas crisis was just beginning to brew. Any disruptions to global LNG export terminals could lead to price volatility.
The recent events coincide with sub zero temperatures in some EU countries, which could lead to a surge in demand for heating. In Slovakia, one of the countries hardest hit by the Russian gas cut-off via Ukraine, temperatures could drop to minus 7 degrees by mid-January.
Meantime, Europe’s gas supply is unlikely to run out this winter, due to stockpiles and shipments from other suppliers. However, traders may find it hard to replenish stocks for the coming heating season.
Gas prices for next summer have recently risen above those for the winter of 2025/26, which would increase the cost of restocking.
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