European Gas Prices Bounce Back

European natural gas prices rose above €77/MWh on Friday, rebounding after three consecutive sessions of losses, with depleted reserves and disruptions to LNG shipments remaining in focus. The region is entering winter with low storage levels as the US-Iran war severely curtailed LNG supplies from the Persian Gulf and record summer heatwaves hampered efforts to rebuild inventories. Underground storage facilities were only around 68% full, well below seasonal averages and the EU’s target of 80% capacity by December. Strong demand from Asia and other buyers could also drive more intense competition for LNG cargoes when colder weather sets in, leaving the region more exposed to price spikes. European gas prices have nearly tripled so far this year and reached their highest level since December 2022 earlier this week. Despite Friday’s rise, European gas prices were down more than 2% this week, their first weekly drop in six.

European natural gas prices steadied at €78/MWh on Thursday, not far from a more than three-and-a-half-year high, as traders assessed the region’s gas supply outlook. Europe is heading into winter with gas storage levels among the lowest seen in two decades, with underground sites only about 68% full, as sustained disruptions to LNG supplies from the Persian Gulf and record summer heatwaves have severely constrained efforts to replenish reserves. This has raised concerns about whether gas supplies will be sufficient during the heating season. Strong demand from Asia and other buyers could also drive more intense competition for LNG cargoes when colder weather sets in. Meanwhile, investors are watching for clearer signals on Germany’s gas purchasing plans, with any increase in buying potentially providing further support to prices amid tight global supplies.

European natural gas prices traded near €80/MWh on Wednesday after rising as much as 4% earlier in the session, with prices remaining close to 2022 highs as supply concerns persist ahead of the winter heating season. Military tensions have kept the Strait of Hormuz largely inaccessible to commercial shipping, keeping Qatari LNG export flows severely restricted and limiting supplies to Europe. European gas storage facilities are around 68% full, still below the seasonal average at a time when inventories would typically be nearing maximum capacity. Concerns over supply security have been reinforced by JERA Global CEO Yukio Kani, who warned that Europe’s low inventories leave the region vulnerable to prolonged disruptions and stronger competition for LNG cargoes. At the same time, scheduled maintenance at Norwegian gas facilities is temporarily reducing pipeline supplies to Europe, further tightening near-term supply.