By Giulia Petroni

European natural-gas prices jumped in early trade, reaching a two-year high as stronger fuel demand due to colder temperatures risks draining already low inventories.

The benchmark front-month gas contract at the Dutch TTF hub rose as much as 4.5% to 58.25 euros ($60.17) a megawatt hour on Monday, the highest level since February 2023.

"Temperatures are expected to fall sharply in coming days, particularly in the U.K., Germany and France," analysts at ANZ Research said. "This will likely lead to an acceleration of withdrawals from stockpiles, which are already at their lowest level for this time of year since the energy crisis in 2022."

Gas storage in the European Union was 49% full as of Saturday--significantly lower from 67% at the same time last year--with particularly high daily net withdrawals in Germany due to low wind-power generation, according to data from industry group Gas Infrastructure Europe.

EU members are required to have storage facilities filled to at least 90% of their capacity by Nov. 1. However, current inventory levels are expected to make restocking efforts challenging over the summer.

Meanwhile, gas contracts for summer deliveries have been trading above winter contracts, offering little incentive to store gas. Buyers typically take advantage of cheaper summer prices to purchase and store gas, then sell it for a profit in the winter.

Write to Giulia Petroni at giulia.petroni@wsj.com

(END) Dow Jones Newswires

February 10, 2025 04:55 ET (09:55 GMT)

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