European natural gas prices fell as the risk of a sharp temperature drop in the short term, which could have disrupted the region's supply-demand balance, receded.

Gas prices declined for a third consecutive trading session, erasing previous gains. The March delivery contract experienced a more pronounced drop, attributed to the approaching expiration of the February contract. Many market participants rolled over positions established during the price rebound earlier this month to manage risk.

Weather forecasts for the coming weeks indicate a trend towards milder temperatures in both Europe and the United States, which could alleviate market pressure and push gas prices lower in the near term. However, weather models remain highly volatile, and many traders still believe a return of severe cold in late February is possible. A combination of a cold snap and periods of low wind speeds could trigger more intense market volatility, following this year's turbulent start.

The European benchmark, the Dutch front-month futures contract, fell by 5% to €36.99 per megawatt-hour.