Business & Finance
European natural gas stores hit historical low, driving price spike concerns ahead of winter
Supply disruptions in the Strait of Hormuz and extreme summer weather have dropped EU gas storage to 63%, with analysts warning prices could surpass 100 euros per megawatt-hour.
The short version
- European natural gas inventories sit at roughly 63%, approximately 18 percentage points below the five-year average for this time of year.
- Benchmark Dutch TTF gas futures reached above 68 euros per megawatt-hour, their highest point since early 2023, due to Strait of Hormuz shipping disruptions and reduced nuclear and wind power output.
- Analysts project that continued supply constraints and a cold winter could push European gas prices between 90 and 120 euros per megawatt-hour.
- Potential agreements between Iran and Oman regarding safe transit through the Strait of Hormuz could help alleviate supply shortages if Middle East LNG exports resume.
Key facts
- European Union gas storage levels stand at about 63%, roughly 18 percentage points below the five-year average and among the lowest on record for this season.[CNBC]
- European benchmark Dutch TTF futures rose above 68 euros per megawatt-hour on Tuesday, marking the highest level since early 2023.[CNBC]
- Morningstar equity analyst Tancrede Fulop projects that a cold winter combined with prolonged supply limits could push prices to between 90 and 120 euros per megawatt-hour.[CNBC]
- Goldman Sachs analysts stated that gas futures must surpass 100 euros per megawatt-hour to curb Asian demand if Middle East LNG export recovery progresses slowly through 2027.[CNBC]
- Shipping disruptions in the Strait of Hormuz have constrained LNG exports from Gulf producers such as Qatar during the European refill season.[CNBC]
- High summer heat caused shutdowns or output reductions at nuclear facilities across Europe alongside weak wind power generation, while driving up power demand for air conditioning.[CNBC]