Volatility returned to UK gas and power markets with a vengeance this week, as a perfect storm of bullish drivers led the front month gas contract to its single biggest one-day price increase since December 2021. Depleted EU gas storage; cold weather forecasts; tightening of US LNG supply; geopolitical anxieties and a heavily-shorted European gas market combined to dispel the soft bearish sentiment that characterised late 2025.
UK weather forecasts now indicate 6-weeks of below seasonal normal temperatures beginning in late January, with North West Europe also expecting below-average temperatures for much of February. Plunging temperatures in Tokyo, Seoul and Beijing saw North East Asian LNG prices surge. While Europe maintains a price premium over NE Asia from the perspective of US LNG exporters, the gap has narrowed in Asia’s favour.
Europe’s aggregate gas storage fullness has now dropped below the 50% mark amid above average withdrawals. Forecasts now show NW Europe entering March 2026 with 72TWh of gas in storage, slightly over half the 136TWh in storage at the same time during the 2022 crisis and less than a third of the 7-year average.
Investment funds – which had heavily shorted the TTF over the course of December -rushed to close their short positions in the face of bullish movement on Friday 16th, resulted in still further bullish momentum. The latest Commitments of Traders report issued on 21st January confirms a massive swing from 55TWh net short last week to 57TWh net long.
Feedgas flows to Corpus Christi and Freeport LNG slumped on 14th & 15th Jan but have now rebounded. The Trump administration’s rhetoric around Greenland caused markets to reflect on the reliability of the US as a source of gas exports.
