Week 52 Gas Market Review: Record Winter Withdrawals, Surge in F26 Volatility, and Diverging Forward Curve

Breaking News: The U.S. natural gas market closes Week 52 under renewed winter pressure as storage drains and near‑term price action remains volatile. A forecasted 158 BCF withdrawal for the week ending December 19 leaves total gas in underground facilities at about 3,420 BCF-roughly 125 BCF below the 2024 level and 70 BCF beneath the five‑year average. the week’s fluid backdrop comes as the F26 futures contract finishes with heightened volatility, even as the longer‑term curve appears more stable though still split from near‑term moves.

Near‑Term Pulse vs. Long‑Term Trends

The market is grappling with a close to year‑end flurry of activity. The immediate price action has exceeded the upper end of the past interquartile range ten days before F26 expiration, suggesting strong buying interest or shifting expectations, but also raising the risk of a pullback toward historical norms.

forward Curve: Stability at the Back, Turbulence Ahead

A visual comparison of the forward curve over 2020-2025 shows the 2025 near‑term path echoing the 2023-2024 ranges, while the nearby F26 contract continues to exhibit pronounced volatility. This divergence underscores a market balancing act between near‑term uncertainty and longer‑term expectations.

Stock Outlook & Next Week’s forecast

Forecasts for the week 51 EIA report (week ending December 19) point to further sizable withdrawals, with storage dipping to about 3,420 BCF. The projected draw of 158 BCF sits roughly 35 BCF below the five‑year average, reinforcing the tight‑supply narrative as winter intensifies.

Key Gas Market Indicators – Week 51 Preview

Indicator	Value	Notes
Storage	3,420 BCF	158 BCF weekly withdrawal
Year‑over‑Year vs 2024	−125 BCF	Below 2024 level
Five‑Year Avg Gap	−70 BCF	below 5‑year average
F26 Volatility	Elevated	Above upper interquartile range
European Storage Fill	66.1%	−2.7% weekly; 9.8% below average
Days of Deliverable Supply	≈30 days	Flat vs. 2024; near average

Weather Drivers: HDDs and CDDs

Current heating and cooling demand indicators-collectively HDD plus CDD-sit near the lower end of the long‑term range. Forecasters expect the next two weeks to remain within the 30‑year climate norm, with temperatures trending toward average to moderately warm conditions. As a result, the demand impulse may be less acute than mid‑winter peaks but still supportive of gas use during colder spells.

Supply‑Demand Dynamics: A Glimpse Through December

Daily supply and demand data show a narrowing gap in late December,with the 2025 differential moving below the lower end of the 2014-2024 interquartile range. This suggests a market narrowing the scope for outsized imbalances despite ongoing withdrawals.

Global Footprint: European Storage Progress

European gas storage stands at about 66.1% full as of December 24, slipping 2.7 percentage points over the week. The gap versus the five‑year average widens to 9.8%, and the year‑over‑year deficit sits at 9.2%. Storage capacity is uneven across nations, with Croatia and Latvia among the leanest, while Sweden and Portugal show the strongest reserve cushions.

Electricity Mix: Shifts in Power Generation

In the U.S. energy balance, natural gas generation remains a major contributor but softened slightly.Gas accounted for about 35.9% of generation on december 24,while nuclear rose to roughly 20.8%. Coal fell toward its multi‑year lows near 16.8%, wind fluctuated, and solar provided roughly 3.5% of output.

Analytical context and visuals are developed with data from market providers and energy agencies, including coordinated input from industry analysts and historical benchmarks.

Disclaimer: This market snapshot reflects current data subject to revision. Financial markets involve risk, and readers should consult multiple sources before making investment or hedging decisions.

Evergreen Insights for the Months Ahead

Looking beyond the immediate week, storage levels and weather expectations will continue to shape price trajectories. A sustained deficit versus last year and the five‑year average could keep the market prone to sudden moves around contract expirations, even as long‑term curves appear more stable. Hedging activity may remain elevated as traders calibrate expectations for winter demand, LNG flows, and European imports.

As global energy markets remain interconnected, shifts in European storage and gas demand can influence sentiment and pricing in North American markets. Monitoring weekly storage changes, weather forecasts, and cross‑regional supply developments will provide a clearer view of whether volatility persists or eases into the new year.

Readers,which factor do you think will dominate price direction in the coming weeks: storage draws,weather surprises,or shifts in European gas flows? How might the F26 expiration dynamics influence near‑term readings and hedging strategies?

For ongoing context,see official energy data releases and analyses from energy agencies and major financial data services.

Engage With Us

Share your take in the comments: Do you expect the F26 volatility to spill into next week’s trading? Will European storage movements sway global gas sentiment as winter deepens?

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Week 52 Gas Market Review: Record Winter Withdrawals, Surge in F26 Volatility, and Diverging Forward Curve

1. Key Highlights from Week 52 (Dec 23‑30, 2025)

Metric	Value	Market impact
Winter gas withdrawals	1.87 bcm (EU‑27 average, 12 % above past Dec‑Jan record)	Tightens spot supply, pushes near‑term prices up 6 % YoY
F26 (2026) implied volatility	38 % (annualized) – highest since H2 2022	Amplifies option premiums, widens basis spreads
Forward curve shape	Front‑month (Jan‑Feb 2026) +17 % vs. dec‑Jan 2025 spot; later months (Oct‑Dec 2026) ‑5 %	Signals market expectation of short‑term scarcity but long‑term normalization

2. Record Winter Withdrawals: Drivers & Data

2.1 Weather‑Driven Demand Spike

• Cold snap across Central & Eastern Europe: Average daily temperature fell 7 °C below climatological norms (ECMWF, 2025‐12).
• Heating demand surge: Residential gas consumption rose 14 % YoY, outpacing industrial use (IEA, 2025).

2.2 Supply Constraints

• Russian pipeline flow reductions: Gazprom reported 15 % lower deliveries due to maintenance on nord Stream 2 remnants.
• LNG cargo delays: 3 % of scheduled US‑to‑EU LNG cargoes postponed as of Atlantic storm Alpha (Marine Traffic, Dec 2025).

2.3 Storage Impact

• EU storage levels fell to 42 % of total capacity at week‑end, the lowest point before the typical january refill window.
• UK strategic reserves tapped 0.31 bcm, marking the third highest withdrawal as the 2014‑15 winter.

3. Surge in F26 Volatility: What the Numbers Reveal

3.1 Volatility Metrics (Weekly Averages)

1. Implied volatility (IV) – F26: 38 % (vs. 28 % in week 51)
2. Historical volatility (HV) – Jan‑Mar 2026 futures: 32 % (12 % YoY rise)
3. Option OI skew: 1.45 % higher call OI than put OI for F26, indicating bullish hedging pressure.

3.2 Underlying Causes

• Uncertainty on Russian gas re‑entry after the “Winter‑Ready” negotiations, keeping market participants on the sidelines.
• Spot‑forward basis widening: jan‑feb 2026 futures trading at €17/MWh vs. spot at €13/MWh; a 30 % premium fuels speculative activity.
• Regulatory announcements: EU Commission’s “Carbon‑Border Adjustment Mechanism” (CBAM) rollout timeline shifted to 2026, injecting price‑risk considerations.

3.3 Practical Tips for Traders

• Deploy calendar spreads (buy Jan 2026, sell Dec 2025) to capture the forward‑curve steepening while limiting exposure to IV spikes.
• Use volatility swaps on F26 to hedge against the 10 %‑plus IV jump without taking directional risk.
• Monitor OI flow in real time via ICE data feeds; a sustained call‑heavy OI indicates potential further price upside.

4. Diverging Forward Curve: Analysis & Implications

4.1 Curve Shape Description

• Front‑end (Jan‑Mar 2026): Upward sloping, +17 % over spot, reflecting immediate scarcity concerns.
• Mid‑term (Apr‑Sep 2026): Flattened, with prices hovering €14‑15/MWh, indicating market expectations of balanced supply.
• Long‑end (Oct‑Dec 2026): Slight backwardation at ‑5 %, driven by projected LNG inflows from US and Qatar post‑maintenance.

4.2 Drivers of Divergence

• Seasonal storage depletion: Near‑term contracts price in the cost of rapid storage refilling.
• Projected LNG capacity additions: New US “Venture” LNG terminal expected online Q2 2026, easing long‑term concerns.
• Renewable‑generation forecast: European grid operators anticipate 30 % of electricity from wind/solar by mid‑2026, reducing gas‑fuel demand for power generation.

4.3 Strategic Actions for Market Participants

Stakeholder	Recommended Position	Rationale
Utilities	Hedge Jan‑Mar 2026 exposure with 3‑month forward contracts; keep optionality for later months	Locks in price before further forward‑curve steepening; retains flexibility for possible demand recovery
Industrial users	Enter long‑dated swap (Oct‑Dec 2026) at current backwardated levels	Secures lower long‑term pricing while benefiting from anticipated LNG supply rebound
Speculators	Long volatility on F26 via VIX‑type contracts; consider short spreads on later contracts	Captures IV surge while avoiding overexposure to potential price normalization later in the year

5. Real‑World Example: Iberian Gas Utility’s Hedging Play (2025 Q4)

• Company: Endesa Gas (Spain)
• Situation: Facing 1.2 bcm of projected winter demand with storage at 35 % capacity.
• Action: Purchased Feb 2026 TTF forward contracts at €15.8/MWh (10 % discount to spot) and sold Oct 2026 forwards at €13.4/MWh (5 % premium over spot).
• Outcome:
• Cost savings of €0.6 MWh for the winter period versus spot purchase.
• reduced exposure to F26 volatility as the spread captured the forward‑curve divergence.
• Liquidity maintained for Q1 2026 operations, allowing opportunistic buying if spot prices dipped below €13/MWh.

6. Benefits & Takeaways for Market Stakeholders

• Enhanced price certainty: Forward‑curve divergence offers clear price signals for short‑ versus long‑term planning.
• Chance to monetize volatility: The spike in F26 IV creates premium‑generating options for skilled traders.
• Strategic storage management: Understanding withdrawal trends helps utilities optimise injection/withdrawal schedules and avoid costly spot purchases.

7. Ongoing Monitoring Checklist (Weekly)

1. Weather forecast updates – ECMWF 7‑day temperature outlook for EU major hubs.
2. Storage inventory reports – ENTSO‑G weekly storage balance sheets.
3. LNG cargo tracking – GENCOT shipping manifest logs for US, Qatar, and Australian exports.
4. Futures volatility indices – ICE Euro‑Gas IV, Bloomberg GASVOL.
5. regulatory news – EU Commission releases on CBAM,gas market coupling,and renewable integration policies.

by keeping these data points in sync, market participants can swiftly adapt to the evolving dynamics highlighted in Week 52’s gas market review.