A Tricky Month for European Gas Trading

Without a shadow of a doubt January 2025 will go down as one of the trickiest months I have witnessed for European Gas Traders.  That is some statement when I first hovered my mouse over the OCM back in 2001!!!

It actually started fairly obviously with the momentum from the Xmas rally continuing into the first couple of days of January and the bulls getting a late Xmas present.  Its always so important to have a good start to the year and for those bulls who got greedy and didn’t accept your gift, I have little sympathy.  The move down looked fairly clear to me as well, we had simply run out of reasons to go up and Asia seemed to be losing any interest with Europe above 50 euros.

After that things started to get confusing, with politicians continuing to make a difficult job even harder, weather runs flipping all over the place and LNG indicating its arrival but not quite turning up in the volumes we need.  Chuck in some spicy prompt prices, crazy spreads and carbon on a mission and surely the bulls would get their breakthrough?   But thus far they haven’t with 50 euros still providing an invisible celling that has so far been impenetrable.

How bullish are the bullish factors?

Weather

We are in winter and are finally having a pretty chilly one by recent standards   Every time the models look to have gone back warm, they gradually go colder as we approach delivery.  If it stays cold and we get any nasty sting at the tail end, then we could be in trouble.

Rob’s Bullish Rating

Potentially V bullish

TSO Storage Levels

We still don’t have any real detail and not sure the announcement last week was anything new.  What we do know is that Europe like the rest of the world is skint!! Surely this year TSO’s, governments and storage operators will work closely together to actually fill storage at optimum levels, rather than just blindly taking it up the hoop in a very inflated Q3.  If Oct outturns above Dec I’ll eat my trading manual live on LinkedIn.  :>)

Rob’s Bullish Rating

V Over Hyped unless it’s very cold

Russia, Ukraine and Sanctions

Vlad has done rather well at evading sanctions so far, so who knows what will happen this time and we still have no idea what Donald has up his sleeve.  Things have been eerily quiet on Russia and Ukraine in the last week, which usually suggests the wheels of power are turning.

Rob’s Bullish Rating

Will be big either way, just not sure which!

Conclusion

It’s been a tumultuous month for sure, but there is no point sitting licking your wounds or feeling sorry for yourself, you need to be proactive. 

·         Where were you unlucky?

·         Where did you make mistakes?

·         Where did you get involved through FOMO?

·         Did you ignore your gut feel?

·         Did you stay in attack mode, when defence mode was needed?

·         Were you disciplined with entry and exit points?

·         Did you get greedy?

·         Did you continue to follow trends, when counter trading has been the right call?

Despite the sombre tone of the article, I do know many of my clients who have a positive P and L this month and they are still beating themselves for not being up more!!!  Flat or positive is a great result as far as I am concerned and there is an awful long way to get in 2025. 

Another weather flip this am has February and March again tentatively approaching 50 euros, so maybe this is the breakthrough, but I’m really not sure to be honest?  What I am convinced of is that there will be far easier months and lots more opportunities ahead, so stay patient, keep improving and stay lucky.