Some traders are betting that Europe’s natural gas prices would surge by 60% from current levels by next summer, amid many uncertainties on the market months from now.
Options were traded on Monday at calls of $59 (50 euros) per megawatt-hour for April to September 2026, data compiled by Bloomberg showed on Tuesday.
Dutch TTF Natural Gas Futures, the benchmark for Europe’s gas trading, have traded at around $37.75 (32 euros) per MWh in recent weeks, with the forward price for the summer 2026 at around $36.57 (31 euros) per MWh.
The options traded on Monday suggest that some traders are betting that Europe’s natural gas prices could spike by 60% from current levels by the spring and summer.
While market expectations are that new LNG supply will come online next year, traders have been hedging against another potentially cold winter in Europe that could deplete inventories.
The past winter in Europe was the coldest since the start of the Russian war in Ukraine, which combined with the halt of Russian pipeline gas deliveries via Ukraine from January 1, 2025 to accelerate withdrawals from storage this heating season.
A similarly cold winter and a rebound in Asian LNG demand could force Europe to pay up for its gas supply next summer, when companies and traders are looking to fill storage sites.
This summer, LNG demand in Asia is tepid, allowing Europe to draw a lot of U.S. LNG cargoes. The weakness in Asian LNG demand has been welcome news for Europe as the EU scrambles to fill up inventories going into the winter.
Uncertainties about the Russian gas supply to Europe are also making the options market for next year ripe for speculation.
As the United States is pressuring Europe to cut off energy revenues for Russia, the European Union took a step to bring forward a ban on imports of Russian LNG a year earlier than planned—to January 1, 2027.
By Charles Kennedy for Oilprice.com
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