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According to Oilprice, Europe’s natural gas inventories are dwindling at the fastest pace since 2018 as frigid temperatures increase heating demands.
Data from Gas Infrastructure Europe reveals that gas storage levels are currently at approximately 70%, a significant drop from the 86% recorded during the same period last year. Compared to the 2024 peak, gas inventories have plummeted by 25%, marking the most substantial decline in seven years.
Samantha Dart, director of natural gas research at Goldman Sachs Group Inc., warns, “If gas inventories continue to decline sharply by the end of March, Europe will struggle to replenish stocks ahead of next winter, especially if temperatures remain colder than the average forecast.”
However, natural gas prices have eased due to the absence of immediate supply shortages, despite rising demands. European natural gas futures dipped to 47.90 euros/MWh on January 6, following a 3.8% increase at the start of the month.
Europe’s reliance on global LNG to replace Russian pipeline flows has heightened the region’s exposure to price volatility. With unexpected power outages, including the shutdown of Norway’s Hammerfest LNG plant, the market is expected to remain turbulent.
Russia’s natural gas exports to Europe via pipelines passing through Ukraine ceased at the beginning of 2025, bringing an end to Moscow’s dominance in the European energy market. Russian gas company Gazprom announced it had halted supplies at 05:00 GMT on January 1 after Ukraine refused to extend the transit agreement.
Ukraine will lose transit fees of up to $1 billion per year from Russia, while Gazprom will take a hit of nearly $5 billion in sales.
However, Europe did not descend into chaos as it did in 2022, as natural gas prices remained relatively unaffected by this cut-off, thanks to the continent’s efforts to secure alternative sources.
Previously, energy experts had warned that Austria, Hungary, and Slovakia were likely to be the hardest hit by reduced imports. Fortunately, Slovakia has secured a new supply from SOCAR, Azerbaijan’s state-owned oil and gas company, which has started delivering natural gas to Slovakia’s SPP, the country’s largest energy company.
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