European gas hits highest since 2022 as storage lags

European natural gas prices have reached their highest level in almost four years. Buyers are bracing for a heating season with thin reserves and little liquefied natural gas (LNG) from the Persian Gulf. Front-month futures on the Dutch TTF hub, Europe's benchmark, settled above 84 euros per megawatt-hour on Monday, October 12. That is the highest level since December 2022, according to ING.think.ing

EU gas storage is just short of 75% full. A year ago it was 83% full, and the five-year average for this point in the season is 89%, ING said. The Wall Street Journal reported Tuesday that Europe is heading into winter with low reserves and uncertain Gulf supplies.think.ing

Gulf supply fears drive prices

Trading Economics said prices rose Monday because more tankers were attacked in the Strait of Hormuz and regional tensions grew. Before the war, about 20% of the world's LNG trade passed through the strait. ING said markets are "grappling with the idea that we're about to go through a large part of the Northern hemisphere winter with little Persian Gulf LNG supply." The bank warned this could set Asian and European buyers competing for cargoes and leave prices "vulnerable to spikes higher".tradingeconomics+1

ING also pointed to buying by EU member states trying to meet their storage targets. It said Germany's buying in particular is adding support to prices. Gas also gained as traders doubted the Russia-Ukraine energy ceasefire that President Donald Trump announced. Brent crude closed near \$107 a barrel, its highest close since mid-September.think.ing

A record-low starting point

Gas Infrastructure Europe, the trade body for storage operators, said EU storage stood at 72% on October 1. The Institute for Energy Economics and Financial Analysis (IEEFA) put the figure at 72.4% on October 3. That is the lowest level for the time of year since records began in 2011. Earlier this year, the European Commission cut its mandatory storage target for this winter from 90% to 80%.environmentenergyleader+2

Reuters reported that analysts expect storage to be 75% to 78% full by November 1, when the restocking season usually ends.reuters

Enough gas, but a costly winter

The European Network of Transmission System Operators for Gas (ENTSOG) said the EU system is flexible enough to meet winter demand. The Commission's Gas Coordination Group backed that view on October 8. ENTSOG's reference scenario, which assumes minimal Russian pipeline supply, has storage ending March at 29% if LNG flows well and 13% if LNG is tight.environmentenergyleader

IEEFA estimates that storage could release 7.3 billion cubic meters less gas this winter than last. Combined with the EU's full ban on Russian LNG imports from January 2027, that could require the bloc to cut winter gas demand by 7%. "This does not mean EU gas storage will run dry this winter," IEEFA wrote. It added that falling storage levels slow withdrawals and make "a late-winter cold snap" harder to handle.ieefa