Insights 
VT 
European Natural Gas prices have increased due to colder weather and reduced wind generation. These factors have raised demand expectations, with storage levels at 83%, below the five-year average of 92%.
Despite this, speculative interest in the market remains low. The current conditions, which include prospects for less wind generation and colder-than-usual weather, continue to maintain pressure on prices.
Although the EU Gas balance shows vulnerability this winter, the market does not show much concern. The level of speculative interest remains minimal in the European Gas market.
We are seeing European natural gas prices strengthen, with the front-month TTF contract climbing toward €50/MWh. This is happening because forecasts point to colder-than-average temperatures and lower wind generation for December. This situation is tense given that EU gas storage is only at 83%, well below the five-year average of 92%.
Despite these bullish signals, the market appears complacent and isn’t fully pricing in the winter risk. We see this reflected in recent commitment of traders data, where net speculative long positions remain near their lowest levels since the summer of 2025. This lack of engagement suggests a potential for a sharp price move if the cold weather actually materializes.
We only have to look back to the energy crisis of 2022 to understand the potential for extreme price volatility when the supply balance is threatened. While the situation is less severe, that period showed how quickly prices can surge over €100/MWh when a cold snap combines with supply uncertainty. This historical precedent should inform any strategy concerning downside risk protection.
For traders, this suggests that buying call options for January and February 2026 delivery could be an effective way to gain exposure to a potential price spike. Implied volatility is relatively subdued due to the current market mood, making options cheaper than they might be otherwise. Bull call spreads could also offer a lower-cost strategy to profit from a moderate price increase through the coldest months.
We must also consider the risk that the cold snap does not last, similar to the relatively mild winter of 2023-2024 which sent prices tumbling. Recent shipping data shows a steady flow of LNG tankers heading for Europe, which could cap any significant rally. Therefore, any bullish position should be carefully sized and managed against developing weather forecasts.
