European natural gas prices rise as supply tightens and global demand increases
Natural gas prices in Europe rise as LNG competition between global powers intensifies
Natural gas prices in Europe have held steady above €35.7/MWh, continuing the upward trend seen last week. The increase in prices is driven by growing competition for liquefied natural gas (LNG) supplies between Europe, India, and China.
As utilities across Europe ramp up their restocking efforts ahead of the summer months, demand for natural gas continues to rise. At the start of May, European gas inventories were only 40% full, significantly lower than the 62.7% level at the same time last year.
Natural gas price dynamics (April 2025 - May 2025) Source: TradingView.
Market factors supporting price growth
The global LNG market has also been bolstered by improved U.S.-China trade relations, with easing tensions between the two countries expected to benefit energy-hungry industries in China. This boost in demand from China is contributing to higher competition for available LNG supplies. In response, the European Union (EU) has announced plans to phase out all imports of Russian gas and LNG by 2027, with a ban on spot imports scheduled to begin in 2025. This move is part of the EU’s broader strategy to reduce reliance on Russian energy.
At the same time, the EU has voted to reduce its gas storage target for the upcoming winter to 83%, down from the current 90%, as part of efforts to manage the tightening energy supply.
Natural gas technical outlook
Natural gas futures are trading around $3.791, testing the upper boundary of an ascending channel. The price recently encountered resistance at $3.825, a level that has capped gains in recent sessions. If this resistance is broken, the price could rise toward the $3.926 mark, with the next significant resistance level at $4.020.
Immediate support is found at $3.722, aligned with the lower trendline of the ascending channel. If this support level is broken, the price could drop to the next support at $3.626. The 50-day exponential moving average (EMA) at $3.659 remains a crucial support level in this uptrend.
Market outlook and future developments
As natural gas prices test the upper boundary of their ascending channel, a breakout above $3.825 could signal continued bullish momentum toward $3.926. However, a pullback below $3.722 could lead to a deeper correction, with $3.626 serving as the next support.
With the EU's energy policies and growing competition for LNG supplies, volatility in natural gas markets is expected to continue. Traders will also keep an eye on the developments in the U.S.-China trade talks, as they could impact global energy demand and price dynamics.
