European Gas Prices Stay Elevated

European natural gas prices hovered near €87 per megawatt-hour on Thursday, their highest level since 2022, amid Persian Gulf supply risks and low winter storage reserves. Shipping disruptions through the Strait of Hormuz have constrained LNG flows from the Middle East, which accounts for around 20% of global LNG exports. The loss of Gulf supplies has intensified competition for spot cargoes, tightening availability for Europe and complicating efforts to replenish inventories. European gas storage facilities are currently around 74% full, below historical averages for this time of year. Storage replenishment could face further challenges from early-season cold weather, with updated forecasts pointing to a significant cold snap across northeastern Europe from next weekend that could boost heating demand. Meanwhile, the recovery in Norwegian pipeline supply provided some relief.

European natural gas prices fell below €86 per megawatt-hour on Wednesday but remained near their highest levels since 2022, as Middle Eastern LNG exports remained constrained and gas storage levels were still low. Although countries including the US, Canada, and Nigeria have increased LNG exports, curtailed supplies from the Persian Gulf has intensified competition for spot cargoes, limiting availability for Europe and making it harder for the region to rebuild inventories. Europe’s gas storage facilities are 73.94% full, still below historical averages. Forecasts of colder-than-usual weather, particularly in Central Europe, could drive up heating demand and prompt earlier withdrawals from storage. Meanwhile, unplanned outages at Norwegian gas infrastructure have also reduced pipeline export capacity to Europe. With low gas storage levels and uncertain Gulf supplies, Europe faces the risk of sharp price increases if a severe cold snap hits this winter.

European natural gas prices climbed to €86 per megawatt-hour on Tuesday, reaching their highest level since December 2022 as concerns over limited supplies and low storage levels intensified ahead of winter. Gas facilities across Europe are currently 73.75% full, leaving inventories well below typical levels for this time of year. Forecasts for colder weather in northwestern Europe from next weekend could further increase heating demand, putting additional pressure on already limited reserves. With storage levels lower than in previous years, the market remains particularly vulnerable to sudden temperature changes or unexpected supply disruptions. Stronger European demand could also intensify competition for liquefied natural gas (LNG) cargoes in the global market. Meanwhile, escalating tensions in the Middle East have driven North Asian LNG prices to nearly three times their pre-conflict levels, increasing competition between Asian and European buyers for available shipments.