Europe and East Asia are set to experience a cold snap next week. The energy market, already strained by high prices and competition for liquefied natural gas (LNG) supply, will face an early test of its resilience from this cold wave.
Starting this weekend, average temperatures across large parts of the European continent will drop 2 to 3 degrees Celsius below normal levels. Meanwhile, a cold wave is expected to sweep across northeastern China, Japan, and South Korea, with some areas seeing average temperatures 5 degrees Celsius below normal. The two cold snaps overlap in timing but are relatively short in duration, yet they will still serve as an early stress test for power and energy markets.
Although a strong El Niño phenomenon is expected to bring a milder winter overall across the Northern Hemisphere, brief cold snaps can still jolt energy prices. On Monday, European benchmark natural gas futures broke above 97 euros per megawatt-hour for the first time since the 2022 energy crisis, while the region's gas storage was only 75% full, below the seasonal norm of 90%.
Atmospheric G2 meteorologist Andrew Pedrini said that as winter approaches, what the market fears most may be "simultaneous cold weather across multiple high energy demand regions." According to models from the European Centre for Medium-Range Weather Forecasts (ECMWF) and analyses from government and commercial forecasting agencies, Europe's cooldown is expected to begin midweek from France and Germany. Weather in the Mediterranean and Balkan regions has already been unusually cold. ECMWF data shows that Paris temperatures on Saturday are expected to be 2.7 degrees Celsius below normal, with lows dropping to 4 degrees Celsius. Munich temperatures will be slightly above freezing.
According to MetDesk weather models and analysis, wind power generation in northwestern Europe is expected to decline from midweek, with low output persisting into next week. Atmospheric G2 meteorologist Takahisa Nishikawa said the largest temperature anomalies in Asia are expected in northern China and northern Japan, where average temperatures will be more than 5 degrees Celsius below seasonal averages. He added that widespread snowfall is expected in northern China, which could drive up heating demand while suppressing solar power generation. "Although these cold snaps are expected to be relatively brief, they may provide an early test for energy demand in East Asia," he said.
The cold snap arrives as Chinese coal prices are at a three-year high. This cold wave will be driven by a high-pressure system over the Ural Mountains, which causes the jet stream to dip southward, allowing cold air to flow into East Asia. Nishikawa said that while the El Niño phenomenon, currently approaching historically high intensity, is expected to bring relatively mild winter temperatures to Asia, the risk of strong but brief cold snaps remains. He noted that the strong El Niño of 2023-2024 led to multiple episodes of unusually low temperatures in Japan.
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