Europe's gas market sees significant 5% increase in February

The average price of natural gas in Europe saw a 5 per cent increase in February, reaching approximately $542 per 1,000 cubic meters proceeding from the data from the London ICE futures exchange and calculations.

This price surge was primarily driven by high withdrawal rates from European storage facilities, as well as a decrease in wind energy production, Caliber.Az reports via Russian media.

The cold winter months, coupled with reduced wind power generation, led to increased demand for natural gas. While gas futures were priced at $577 per 1,000 cubic meters on January 31, the market saw a significant decline by February 28. Gas futures closed at $475 per 1,000 cubic meters, marking a 17.7 per cent decrease compared to the previous month. 

The drop in prices towards the end of the month was attributed to milder weather conditions and the start of negotiations between Russia and the US, which helped stabilize market expectations. Since the fall of last year, gas prices at European hubs have been on a steady rise. In September 2024, the average price of gas in Europe was around $416 per 1,000 cubic meters (0.3 per cent lower compared to the same month in the previous year). 

In October, the price rose to $456 (-11 per cent), followed by an increase to $491 in November (-4 per cent). By December, the price had jumped to $489 (+20 per cent), and in January 2025, it surged to $517 (+53 per cent). February saw another significant rise, reaching $542 (+88 per cent). Throughout February, gas prices in Europe experienced mixed dynamics. In the first half of the month, prices reached a two-year high, approaching the $630 mark. This increase was largely driven by near-record levels of gas withdrawals from European underground storage facilities (UGS). 

Currently, Europe's UGS are less than 39.5 per cent full, holding around 43.5 billion cubic meters of gas. Since the beginning of the heating season in late October 2024, EU countries have withdrawn nearly 66 billion cubic meters of gas from storage, with net withdrawals exceeding 62 billion cubic meters. The share of wind energy in the EU's electricity generation was 21 per cent on average in January, but by February, it had dropped to around 13 per cent. This further boosted demand for gas for power generation. However, by the end of the month, there was a sharp reversal in gas prices, driven by milder weather in the region and the start of negotiations between Russia and the US. 

On February 12, Russian President Vladimir Putin and US President Donald Trump held a phone conversation, discussing a wide range of topics, including the Ukrainian conflict and bilateral relations. On February 18, high-level delegations from Russia and the US met in Riyadh. Following the meeting, Russian Foreign Minister Sergei Lavrov announced that both sides had agreed on the swift appointment of ambassadors to the US and Russia.

By Naila Huseynova