By Giulia Petroni

European natural-gas prices surged on expectations of another late-month cold snap boosting heating demand, while inventories remained well below historical averages.

In midmorning trading on Friday, the Dutch TTF benchmark climbed 6.1% to 35.18 euros a megawatt-hour, putting prices on track for a weekly gain of more than 20%.

Europe has seen accelerated withdrawals from its gas-storage facilities in recent days, leaving inventories less than 52% full, compared with a five-year average of 67%. Meanwhile, colder conditions in Asia have already lifted spot-market activity, raising concerns over increased competition for liquefied-natural-gas cargoes.

"Icy Siberian air is forecast to sweep the continent, pushing heating demand higher and potentially intensifying global competition for LNG cargoes," analysts at ANZ Research said.

Asia is also bracing for a blast of cold weather. Temperatures in Beijing and Shanghai could plunge by as much as 20 degrees Celsius by midweek, while Japan issued a nationwide warning for very low temperatures.

"The rally marks a significant shift in the market after stronger heating demand collided with renewed geopolitical risks," energy analysts at DNB Carnegie said. "At the end of last year, confidence in the region's supply cushion, helped by LNG imports and a mild start to winter, drove net-short positions in European gas to the most bearish levels since early 2020."

European gas prices rose earlier this week on concerns over a potential interruption of Iran's pipeline gas flows to Turkey due to growing unrest in the country, breaking a monthslong trend of muted trading within a range of 27 euros to 30 euros a megawatt-hour.

Those fears have since eased as expectations of imminent U.S. military action against Tehran subsided, reducing the geopolitical risk premium. However, investment funds have already reduced their net short in TTF to 55.14 terawatt hours from 92.76 terawatt hours in mid-December, according to ING commodity strategists.

"We have been warning about the potential for a short-covering rally in the market, given the sizable short position that funds held in TTF through the early part of winter," Warren Patterson and Ewa Manthey said.

Write to Giulia Petroni at giulia.petroni@wsj.com

(END) Dow Jones Newswires

January 16, 2026 05:37 ET (10:37 GMT)

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