European gas prices slide as Trump-Putin peace talks fuel bearish sentiment

European gas prices dropped in early trade Feb. 13, with sentiment largely driven by reports of a planned US-Russia peace plan for Ukraine after President Donald Trump and President Vladimir Putin held "lengthy" talks Feb. 12, market sources said.

The Dutch TTF month-ahead price fell below Eur51/MWh as of 1230 GMT, according to ICE data.

Platts, part of S&P Global Commodity Insights, assessed the Dutch TTF month-ahead price on Feb. 12 at Eur55.41/MWh, having reached a two-year high of Eur58.13/MWh on Feb. 10.

Trump said Feb. 12 he had held "lengthy and highly productive" talks with Putin, with both leaders reportedly agreeing to begin negotiations over a potential end to the war in Ukraine.

In a Feb. 12 post on Trump's social media platform, Truth Social, the US president said there was a "good possibility" of ending the war.

It followed talks with both the Russian president and Ukrainian leader Volodymyr Zelenskyy, with the latter said to be meeting with US Vice President JD Vance and Secretary of State Marco Rubio in Munich on Feb. 14.

Market consensus was largely in agreement over the talks prompting bearish sentiment in European gas futures, however sources were careful to draw direct links with a potential resumption of Russian gas flows to Europe via Ukraine.

The European market is still also being driven by weak gas storage levels, a rapid drawdown of European stocks, and the end of the Russia-Ukraine gas transit agreement, with the TTF front-month price more than 20% higher than levels seen in December 2024.

Trader reaction

One European gas trader said that the news around the Trump-Putin call had added to the drop on the curve, along with "weather models turning less cold in the back end and then probably triggering some stop losses."

"Some people have been talking about the potential to have Russian pipeline flows back into Europe in case of a peace deal with Ukraine," a France-based trader said. "Only small volumes but even the thought alone can pressure markets... though it's unlikely we suddenly see big volumes coming."

A third Europe-based trader noted that the talks had "opened the door" for a potential peace deal, however others were less confident that the talks would benefit Europe.

"The view that peace would lead to a resumption of large-scale flows of Russian pipeline gas to Europe is misplaced in our view," Laurent Ruseckas, executive director for First Take Gas and Global Macro at Commodity Insights, said on Feb. 12. " Trump is driving the process and will not be inclined to give Europe a seat at the table, nor to support a resumption of Russian gas flows as part of any deal."

Ruseckas added that the US president's criticism of Germany's dependence on Russian gas had been apparent during his first term in office. Additionally, EU companies have been granted a number of arbitration awards in cases brought against Russia's Gazprom for non-delivery of gas.

Those awards, Ruseckas said, could not be waved away, and would pose a "major obstacle" should peace talks happen.

Other analysts saw bearish sentiment driven by three main factors: Trump's decision to lift the Biden administration's pause on new Department of Energy permits for LNG exports, China's imposition of tariffs on US energy imports, and the proposed peace talks.

This could see Europe's cost competitiveness restored to pre-2021 energy crisis levels, enabling Europe to better compete with Chinese export pressure, according to a Feb. 13 research note from analysts at MUFG Bank.

"We hold the conviction that this will cause significant downside pressure to TTF prices to the Eur20s/MWh level in 2026," MUFG analysts said.

The peace talks come just days after Ukraine's Naftogaz said Russia had carried out a "massive attack" on its energy facilities on Feb. 11, damaging production infrastructure in the Poltava region in the east of the country.

Ukraine has been subjected to numerous missile and drone attacks against its energy infrastructure since the war began, with the latest attack coming on Jan. 15.

Naftogaz said Jan. 15 that Russia had struck "another insidious blow" to Ukraine's gas infrastructure. "As before, the enemy seeks to leave Ukrainians without heat and gas," it said.