European gas markets have entered a markedly different phase, with prices surging after months of relative calm. According to reporting from Bloomberg, benchmark futures are on track for their biggest weekly increase in more than two years, as a combination of weather-driven demand, shrinking reserves and shifting investor behavior has upended earlier assumptions about supply comfort.

For much of the heating season, the market had been defined by low volatility and bearish positioning. Storage levels were widely considered adequate, encouraging traders to bet that prices would remain under pressure. That narrative has changed rapidly, according to the business news organization.

A spell of unusually cold weather has lifted heating demand across Europe, exposing the limits of the region’s gas buffers. Inventories have fallen to below 52% of capacity, well under the five-year seasonal average of roughly 67%, intensifying concerns about both current supply tightness and the challenge of rebuilding stocks for next summer.

The sudden change in fundamentals triggered a sharp shift in sentiment. Traders who had positioned for falling prices have been forced to buy futures to close out their bets, accelerating the rally and amplifying price swings. Analysts describe the move as a reminder of how quickly Europe’s gas market can turn when demand rises unexpectedly.

“Sentiment has completely turned — you could almost call it a perfect storm,” said Arne Lohmann Rasmussen, chief analyst at Global Risk Management, in comments reported by Bloomberg.

The rally is also drawing attention to deeper structural issues. Europe has lost much of the flexibility it once relied on to manage supply shocks, leaving storage as one of the few remaining safeguards. That reliance is becoming more problematic as the market’s pricing structure has flipped, with summer contracts no longer clearly cheaper than winter ones — a dynamic that complicates efforts to refill inventories.

Supply conditions have not deteriorated dramatically. Europe has continued to attract liquefied natural gas cargoes, and pipeline flows from Norway have remained relatively steady. But the recent drop in temperatures followed a period of muted demand, making the rebound more disruptive than it might otherwise have been.

Geopolitical tensions have added another layer of risk. Renewed concerns involving Iran, combined with cold weather in both Europe and Asia, have lifted risk premiums and contributed to the unwinding of speculative positions built on expectations of a swift return of Russian gas, according to market analysts.

Additional strain emerged this week after a storm in France forced some nuclear power facilities offline, increasing reliance on gas-fired generation at a time when inventories are already under pressure.

Although prices remain far below the extremes seen during the 2022 energy crisis, the speed of the latest rally has underscored the market’s ongoing vulnerability. Sudden weather changes, unexpected outages and shifts in global demand continue to have an outsized impact on prices.

“The recent moves reflect how sensitive the market remains to short-term tightness,” said Sadnan Ali, an oil and gas analyst at HSBC Holdings Plc, as cited by Bloomberg.

Reporting is based on information from Bloomberg.