European natural gas prices are rising due to colder weather and less wind energy production. These conditions are increasing demand expectations, while storage levels are at 83%, below the five-year average of 92%. Even with these changes, interest in speculative trading remains low. Continued lower wind generation and colder weather keep pressure on prices. This winter, the EU gas balance shows some weaknesses, yet the market does not reflect significant worry. Speculative interest in European gas trading is minimal. Currently, European natural gas prices are on the rise, with the front-month TTF contract approaching €50/MWh. This is driven by forecasts predicting colder-than-average temperatures and reduced wind generation for December. The situation is concerning, as EU gas storage remains at only 83%, well below the typical five-year average of 92%. Despite these positive signs for price increases, the market seems unaware of the winter risks. Recent data on trader commitments shows that net long positions are near their lowest levels since summer 2025. This lack of trading activity hints at the possibility of a sharp price increase if cold weather arrives. We can look to the energy crisis of 2022 for examples of extreme price swings when supply is tight. Although conditions are less dire now, we saw how quickly prices can soar above €100/MWh when a cold snap occurs alongside supply uncertainty. This history should guide any strategies for protecting against downside risks. For traders, buying call options for January and February 2026 delivery could be a smart move to take advantage of a potential price spike. Implied volatility is low right now due to the current market sentiment, making options more affordable. Additionally, bull call spreads might offer a cost-effective way to benefit from moderate price rises during the coldest months. However, we must also consider the possibility that the cold weather might not last, similar to the mild winter of 2023-2024, which led to price drops. Recent shipping data shows a steady arrival of LNG tankers in Europe, which could limit any significant price increases. Therefore, any bullish position should be sized carefully and adjusted according to evolving weather forecasts.

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