Its European prices natural gas rose on the first trading day of the year as the region braces for a cold winter without a key source of supply after a contract to transit Russian natural gas through Ukrainian towards her Europe.

In particular, European natural gas rose as much as 4.3% today to 51 euros per megawatt hour, the highest level since October 2023. Russian gas deliveries across Ukraine were halted on New Year’s Day after the transit contract between the two expired warring nations, with no alternative, according to the Bloomberg agency. Natural gas for February delivery on the Dutch exchange is now up 2.1% at 49.93 euros per megawatt hour. The price had also exceeded 50 euros on December 31 in anticipation of the cessation of flows.

Traders are watching to see if the loss of Russian flows – an important source of supply for several central European countries – will prompt faster withdrawals from storage. Inventories across the continent are already falling at the fastest rate since 2021, when the gas crisis was just beginning to erupt.

The outage coincides with forecasts of sub-zero temperatures in some countries, which will bring an increase in demand for heating. In Slovakia, one of the states hardest hit by the cut in Russian flows, the mercury could drop to minus 7 degrees Celsius by mid-January.

While Europe is unlikely to run out of natural gas this winter, thanks to stockpiles and deliveries from other suppliers, traders may struggle to fill storage for the next heating season. Gas prices for next summer have recently risen above those for winter 2025-26, which will make it more expensive to replenish supplies.

“There is a growing risk that the EU will come out of the winter with low levels of natural gas storage, making it expensive to replenish them,” said Arne Lohmann Rasmussen, chief analyst at Global Risk Management in Copenhagen.

Russian pipeline flows to Europe now have only one route – a pipeline that crosses Turkey and sends the fuel to Hungary. Deliveries to this link will be closely monitored.

With the loss of flows through Ukraine, Europe will also increase its dependence on liquefied natural gas (LNG), including from Russia. The country shipped record amounts of LNG to the region last year, making it the biggest supplier after the US, which recently commissioned two new export facilities.

However, for the nations of central and eastern Europe, the cost of sea delivery to Germany, Poland or Greece, subsequent regasification and onward transit makes LNG an expensive option. Slovakia estimated that gas imports from the West would lead to additional costs of 177 million. euro.

“The natural gas markets in Europe are by no means inadequate,” but the transfer of the fuel from west to east is “somewhat limited, so that leads to a premium for the region,” said Walter Boltz, senior energy consultant at Baker & McKenzie.

Europe as a whole will have to compete harder for LNG this year, especially in the summer, when energy demand for air conditioning soars in Asia. While several new LNG plants are under construction worldwide, substantial capacity additions will not be ready for another two years.