Cold spells reduce European gas storage to below 78%, raising winter market risks.

    by VT Markets
    /
    Nov 27, 2025
    European gas storage has dropped below 78% due to colder-than-usual weather. While forecasts suggest milder conditions in early December, storage levels remain below the seasonal average. Speculators have switched to a net short position of 11.4 TWh, down from a net long of 15.6 TWh. This is the first net short position since March 2024, with new shorts hitting a record high. This change poses risks if there are sudden shifts in supply or demand during winter. These insights come from various commercial and analytical sources, highlighting market trends and conditions. Currently, European gas storage levels are at 77.8%, down from 95% last year and well below the 88% comfort level of last year. This drop is driven by colder weather across Europe, which has increased heating demand. Despite the tightening supply, speculators are increasingly bearish. They have taken a net short position for the first time since March 2024. Recent reports show a record level of short positions, indicating that many expect early December’s milder weather forecast to lower prices. This expectation has kept front-month TTF prices close to €55/MWh. This large short position could lead to a short squeeze soon. Any unexpected positive news, like a supply issue at an LNG facility or a longer cold spell, might force these speculators to rapidly cover their shorts. Even a small event could spark a significant price increase. Given these risks, maintaining large short positions is very risky. Instead, traders should think about buying out-of-the-money call options for January and February. These options are relatively inexpensive but have great potential for profit if prices spike, offering a low-risk way to take advantage of current market pressures.

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