MARKET COMMENTARY

The new year begins with two bombshells at a time when geopolitical readjustments and winter realities are shaking the foundations of the energy markets. Political rifts are creating uncertainty; temperatures are putting pressure on infrastructure. ‘Gas storage levels are at an all-time low,’ says INES Managing Director Sebastian Heinermann. Against this backdrop, two questions arise: What significance do recent international conflicts have? And will there be enough gas when the cold weather hits the natural  gas storage facilities?

The attack on Venezuela is an example of political aggression with no immediate physical impact on global oil supplies. The reason for the lack of price-driving effects is that, despite its large oil reserves, the South Ameri-can country does not have significant export volumes. Although volumes have risen from a low of 0.5 MBPD (2020) to around 1 MBPD (= 1,000 barrels per day) at present, they are still well below the former level of around 2.5 MBPD. Against the backdrop of global demand of around 100 MBPD, Venezuela's export volumes are not sufficient to trigger signs of scarcity in Europe on their own. In the medium term, both increases in production (e.g. through sanctions already announced by Trump, forcing Venezuela to make mandatory sales to the US) and further declines are conceivable – factors of uncertainty that shift the risk balance, but whose consequences are limited. 

This is in stark contrast to the situation in Iran, where people are protesting against the regime in the streets. Consequently, concerns about oil supplies are growing on the markets. Iran is the fourth-largest OPEC member and currently produces around 3.2 MBPD. Global conflicts always have an impact on energy markets – some experts in the field of imperialist geopolitics even emphasise a causality in that the hunger for energy is one of the most important causes of wars – but fundamental factors currently appear to be robust. We do not currently see any significant consequences, but caution is still advised, as external factors have been the main drivers of large, short-term price changes for years.

The thermal situation is also clearly strained, with the cold January leaving its mark: temperatures in north-western Europe are well below normal, and EU gas storage facilities are currently being depleted at a rate of around 6 TWh per day. Various analyses predict that storage utilisation will end the season at between around 20% and 35%; the lowest level in 2021 was around 29%. Extreme market voices – including EWE CEO Stefan Dohler – warn that if high withdrawal rates continue, residual levels of around five per cent appear possible in extreme cases at the end of March. At the same time, this scenario is considered rather unlikely because additional volumes can be procured when natural  gas prices are low. 

This availability is not an abstract consolation, but rather the result of visible infrastructure changes: Germany's LNG terminals supplied around 106 TWh (approximately ten percent of imports) in 2025 and, according to BMWE data, offer seasonal coverage of up to 16% of demand. Norway remains the most important supplier with a share of 44 per cent; other partners are the Netherlands (24 per cent) and Belgium (21 per cent). These capacities reduce dependence on storage buffers alone and increase the ability to react at short notice. Natural gas storage levels are therefore no longer as significant a sign of scarcity as in recent years in EU Member States with LNG terminals and for their neighbours with high pipeline capacities. Klaus Müller, President of the Federal Network Agency, echoes this sentiment: ‘We are not concerned about natural  gas supplies in winter; Germany's security of supply is currently guaranteed.’

Market prices reflect this combination of physical tension and available flexibility: since December 2025, the TTF for the current year has been trading well below EUR 30/MWh; contracts until the end of 2026 are also clearly below this level. Visibly increased LNG availability – in the order of around 240 TWh compared to the previous period – and falling US prices have created price pressure. For private end consumers, this manifests itself in energy prices that are more than ten per cent lower than a year ago; CO₂ costs in Germany and Austria remain marginal at EUR 55–65/t, which is well below EUR 2/MWh.

The sober answer to the second key question is therefore ambivalent: based purely on the available data, there is currently enough gas – provided that market mechanisms function and additional quantities can be mobilised. At the same time, the system's tolerance for further disruptions has decreased: storage levels are lower, withdrawal rates are high, and geopolitical variables remain asymmetric risks. Today, security of supply means more elasticity in procurement and logistics than purely physical reserves.

Finally, let us look at price movements on the energy markets. In the second week of January, the German spot market averaged 112.48 EUR/MWh. Since Christmas, three major developments have had an impact on the price of electricity:

• The first, most obvious and currently most important trend concerns CO₂. Since September, there has been a continuous upward trend, driven largely by speculation. The total speculative long position has risen from around 30 million tonnes (August 2025) to 115 million tonnes at present. In recent weeks in particular, demand has been additionally supported by the power market, as cold temperatures have led to high utilisation of fossil fuel power plants. According to forecasts, there is now some relief, at least from the power market. Temperatures are expected to rise above normal again in large parts of Europe in the coming days in January, and wind speeds are also increasing again. More importantly, when will speculative players close out their positions? A (cautious) guess on our part: even though it is getting warmer now, winter is not over yet. However, when spring approaches and demand for CO₂ from the power market declines not only due to temperature but also seasonally, speculative players will sell off their positions.
• Secondly, the spot natural gas price has recovered slightly from its low point (THE: 27.76 EUR/MWh) in mid-December. Since then, however, it has been trading with little volatility around the 31 EUR/MWh mark. At the same time, coal (front month API2) is trading well below 100 USD per tonne. All in all, the fossil commodities needed for power generation are therefore moving without much excitement.
• The third trend concerns renewable energy generation, particularly wind and run-of-river power: after a slight dip in wind power generation in October and November, production has increased significantly since December. For the winter so far, we are currently 13% above the 5-year average for the same period. The trend in run-of-river power, on the other hand, is the opposite. Generation in the Alpine region has been declining steadily in recent weeks and is now well below the seasonal norm for the second week in a row.

What remains in the end? Despite the cold spell, natural gas supply security is not at risk for the time being. The high LNG supply situation offsets the theoretical temperaturerelated price increase: natural gas prices are moving sideways. At the same time, global oil supplies are still moderately affected by international tensions in Iran and Venezuela. The power market is being impacted by renewable energy production that is exceptional for the season, neutralising the high CO₂ prices.

We are waiting for signals and wish all our readers a good start to the new year.

Yours, Felix Diwok

For the Inercomp Team