European natural gas prices rose on the first trading day of this year as the loss of a major supply route coincided with freezing temperatures in the northern region and an unplanned outage in Norway. Benchmark prices also surged on Thursday, closing at their highest level since October 2023.
Russian gas deliveries through Ukraine stopped on New Year’s Day after the transit contract between the two warring nations expired without a replacement in place. While traders had anticipated the loss of Russian flows — a critical supply source for many Central European countries — the supply pressure this week could lead to faster withdrawals from storage sites, which act as a buffer.
The benchmark gas price in the Netherlands increased by about 4.3%, closing up 2.8% at €50.27 per megawatt-hour at 6 PM in Amsterdam. Futures exceeded €50 on December 31 in anticipation of the halted flows.
The European Central Bank (ECB) Governing Council member and Governor of the Bank of Greece, Yannis Stournaras, said in an interview with Greek radio station Sky on Thursday that the ECB’s key interest rate is expected to drop to around 2% by the fall of 2025. However, he noted that this projection could be influenced by unforeseen circumstances, highlighting risks in Europe and the United States.
Many economists and investors expect the ECB to cut interest rates at every meeting until mid-2025, as inflation stabilizes at the 2% target, while the region’s economy continues to struggle.
