European Gas prices jumped more than 4.2%, with TTF climbing back above €33/MWh, driven by forecasts for another cold snap across the continent, ING's commodity experts Ewa Manthey and Warren Patterson note.

Short-covering rally boosts European Gas prices

"The European Gas market continued to rally yesterday. TTF settled more than 4.2% higher on the day, taking the market back above EUR33/MWh. The move was driven by another cold snap forecast for large parts of Europe towards the end of this month."

"Meanwhile, EU Gas storage remains tighter than usual, with it less than 52% full at the moment vs. a 5-year average of 67% full. We have been warning about the potential for a short-covering rally in the market, given the sizeable short position that funds held in TTF through the early part of winter."

"Investment funds have already reduced their net short in TTF from 92.76TWh in mid-December to 55.14TWh currently."