The price of European natural gas continues to soar. At the beginning of this week, it reached its highest level in two years with the prospect of further low temperatures - it snowed lightly in Vienna in the early hours of the morning.

The trend-setting TTF futures contract for delivery in one month was traded at EUR 58.00 per megawatt hour (MWh) on the Amsterdam exchange at the start of the week. This is the highest level since February 2023.

The price has been trending upwards since mid-December, with the increase accelerating in recent trading days. During this time, the commodity has risen in price by more than 40 per cent. The market continued to point to weather forecasts. According to these forecasts, temperatures are likely to fall in north-west Europe in the coming days, which is likely to increase demand for heating.

Dwindling gas reserves

A higher demand for heating could accelerate the drawdown of reserves. Gas reserves have been falling steadily since the beginning of the year. According to the latest data from the European Gas Storage Association GIE, the total filling level of natural gas storage facilities in Germany fell below 50 per cent last week, while in Austria it is just under 60 per cent.

At the beginning of the year, German storage facilities were still almost 80 per cent full. In comparison: a year ago, the fill level at the beginning of February was around 72 per cent.

Despite the recent increase, the price of European natural gas is still well below the level it reached in the early stages of the war in Ukraine. In the summer of 2022, prices rose to well over 300 euros at times.