Chief Analyst Arne Lohmann Rasmussen and PA Arma Selimovic explore recent developments in the European gas market, where geopolitical risk, storage levels, and shifting supply patterns are shaping price dynamics.
Gas prices spiked briefly during the war in the Middle East, as Israel shut down exports and concerns grew over LNG flows through the Strait of Hormuz. With a ceasefire in place, prices have since normalized, but the episode highlighted how sensitive the market is to global LNG disruptions.
The EU is also pushing forward with a proposal to phase out Russian gas by 2027. Much has already been replaced, but the final legislation is still pending. At the same time, EU gas inventories are 20% lower than last year, raising concerns for winter, especially if cold weather hits or Chinese LNG demand rebounds.
Looking ahead, Arne advises a relatively high hedge ratio for the coming winter, given ongoing uncertainty and backwardation in the forward curve. Speculative money continues to influence short-term price moves, but physical fundamentals remain the key driver.
