What happened in the market?
Last week was e-world, the annual European Energy Market trade fair / industry gathering in Essen, so many market participants were out of the office, and markets were thinner than is typical. The main event for the week was supposed to be the THE presentation at e-world. THE is the German natural gas grid, and the market was hoping for some clarity on their strategy around natural gas storage. The presentation turned out to the a nothing-burger. However, separate from that presentation, talk did emerge that the some storage fill targets might be abandoned altogether. On the face of it this seems a bit silly with storage having been drawn down more this winter than at any time since the beginning of the Ukraine war. Removing storage targets would represent a significant bet by regulators on next winter being warm. If a cold snap did materialise, then the risk of a price spike would be very much higher without the cushion of gas in storage. Last week also saw some warmer weather forecast runs. And as a result of all this, European energy prices went down quite a bit, and in particular the summer winter natural gas spread was sold (this related to the headlines around storage).
In the political sphere, discussions about possible ceasefires in Ukraine have clearly been happening in the background for some time, and are now somewhat out in the open. While all sides do want to end the war (and have done for a while) the pathway to ending it is still unclear, and even if that path is uncovered and is successfully travelled, it is unclear how much gas can come back on stream and over how long. Some in Europe certainly want to buy Russian gas, because it will be cheaper than the alternative, which is imports from the US. Interestingly, President Trump has said that the Europeans should buy more US LNG and that he wants to end the Ukraine war. While both of these objectives may be in US interests, they would appear to be in conflict with each other. Quite some ground to cover here therefore.
In EUAs, last week saw a relatively slow start in the EU ETS market. December 2025 futures began the week with high of the week at €84.25. Wednesday brought heightened volatility, with futures experiencing a wide trading range following developments in the gas market. Prices broke lower as some EU nations pushed to relax gas storage targets. On Thursday, the market saw another significant sell-off on high volumes. However, by Friday, prices hit the weekly low of €77.25 before rebounding throughout the day, nearly recovering all of Thursday’s losses. The week ultimately settled at €79.75, marking a €3.03 decline from the previous week.
Source: Bloomberg
Price & position data
December 2025 Futures December 2025 Futures
Week 7 3 Months ICE position w/w Change
VWAP €80.57 €76.39 Investment Firms -329,831 -14,388
High €84.25 €84.50 Investment Funds 60,491 4,925
Low €77.25 €64.05 Commercial Undertakings 204,493 6,071
Average Daily Volume 32,876 22,076 ETS Compliance Firms 65,248 3,675
Source: Bloomberg Source: Bloomberg, Definitions on ICE,
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Wishing you all a good week ahead,
Grey Epoch Europe
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