Natural gas prices hit record highs in Europe and the United States: diverging causes

Natural gas prices are soaring, reaching a record high in the United States and Europe for the past year, driven by weather forecasts for one and geopolitical tensions for the other.

Share:

Natural gas markets in the United States and Europe have seen significant increases, reaching their highest levels in a year. This trend is driven by distinct dynamics in each region.

Weather drives natural gas prices higher in the United States

In the United States, natural gas futures for December delivery surged by 5.10%, settling at $3.356. This increase is primarily due to weather forecasts predicting a drop in temperatures, particularly in the Western U.S., at the beginning of December, following an unusually mild autumn. This expected drop in temperatures, coupled with an anticipated cold snap in the Midwest, could boost natural gas demand for heating.

According to Eli Rubin, an analyst at EBW Analytics Group, this climatic shift triggered a price rebound, crossing key technical thresholds. Many speculators, who had been betting on a prolonged price decline, adjusted their positions, contributing to the upward trend. However, Rubin warns that this recovery could be short-lived, as U.S. natural gas stocks remain at historically high levels. Increased production, encouraged by higher prices, could also exert downward pressure on prices.

Geopolitics play a crucial role in Europe

In Europe, Dutch TTF futures, the benchmark for the continent, rose by 3.22%, reaching €48.303 per megawatt-hour (MWh). This increase, although partially linked to the onset of winter, is mainly attributed to geopolitical factors. Gazprom, the Russian energy giant, suspended deliveries to Austria due to a contractual dispute. Furthermore, military tensions between Russia and the West have intensified, with Moscow recently launching a ballistic missile in response to Ukraine’s use of American missiles on Russian territory.

A regionalized and unpredictable market

Unlike the oil market, the natural gas market remains highly regionalized, with price variations often diverging significantly between regions. This specificity complicates long-term trend forecasting for both markets, especially under current conditions.

Meanwhile, oil prices have also seen notable increases. Brent crude, the European benchmark, rose by 1.95% to $74.23 per barrel, while West Texas Intermediate (WTI) crude in the U.S. gained 1.96%, reaching $70.10 per barrel. These increases, though secondary, reflect a general upward trend in energy markets.

Turkey has connected its gas grid to Syria’s and plans to begin supplying gas for power generation in the coming weeks, according to Turkish Energy Minister Alparslan Bayraktar.
Despite record electricity demand, China sees no significant increase in LNG purchases due to high prices and available alternative supplies.
US natural gas production and consumption are expected to reach record highs in 2025, before slightly declining the following year, according to the latest forecasts from the US Energy Information Administration.
Naftogaz announces the launch of a natural gas well with a daily output of 383,000 cubic meters, amid a sharp decline in Ukrainian production following several military strikes on its strategic facilities.
Sonatrach and ENI have signed a $1.35 billion production-sharing agreement aiming to extract 415 million barrels of hydrocarbons in Algeria's Berkine basin, strengthening energy ties between Algiers and Rome.
Maple Creek Energy is soliciting proposals for its advanced 1,300 MW gas project in MISO Zone 6, targeting long-term contracts and strategic co-location partnerships with accelerated connection to the regional power grid.
VMOS signs a USD 2 billion loan to finance the construction of the Vaca Muerta South pipeline, aiming to boost Argentina's energy production while reducing costly natural gas imports.
According to a Wood Mackenzie report, Argentina could achieve daily gas production of 180 million cubic metres per day by 2040, aiming to become a key regional supplier and a significant exporter of liquefied natural gas.
Côte d'Ivoire and the Italian group Eni assess progress on the Baleine energy project, whose third phase plans a daily production of 150,000 barrels of oil and 200 million cubic feet of gas for the Ivorian domestic market.
The extreme heatwave in China has led to a dramatic rise in electricity consumption, while Asia records a significant drop in liquefied natural gas imports amid a tight global energy context.
E.ON, together with MM Neuss, commissions Europe’s first fully automated cogeneration plant, capable of achieving a 91 % fuel-use rate and cutting CO₂ emissions by 22 000 t a year.
Facing the lowest temperatures recorded in 30 years, the Argentine government announces reductions in natural gas supply to industries to meet the exceptional rise in residential energy demand across the country.
Solar power generation increased sharply in the United States in June, significantly reducing natural gas consumption in the power sector, despite relatively stable overall electricity demand.
Golden Pass LNG, jointly owned by Exxon Mobil and QatarEnergy, has asked US authorities for permission to re-export liquefied natural gas starting October 1, anticipating the imminent launch of its operations in Texas.
Delfin Midstream reserves gas turbine manufacturing capacity with Siemens Energy and initiates an early works programme with Samsung Heavy Industries, ahead of its anticipated final investment decision in the autumn.
Norwegian group DNO ASA signs gas offtake contract with ENGIE and secures USD 500 million financing from a major US bank to guarantee future revenues from its Norwegian gas production.
Golar LNG Limited has completed a private placement of $575mn in convertible bonds due in 2030, using part of the proceeds to repurchase and cancel 2.5 million of its own common shares, thus reducing its share capital.
Shell Canada Energy announces shipment of the first liquefied natural gas cargo from its LNG Canada complex, located in Kitimat, British Columbia, primarily targeting fast-growing Asian economic and energy markets.
The Australian government is considering the establishment of an east coast gas reservation as part of a sweeping review of market rules to ensure supply, with risks of shortages signalled by 2028.
The increase in oil drilling, deepwater exploration, and chemical advances are expected to raise the global drilling fluids market to $10.7bn by 2032, according to Meticulous Research.