Natural gas prices in Europe have approached their highest level since the end of 2022 due to a shortage of LNG supply from Qatar and challenges in filling empty storage before the winter season. The price per megawatt-hour at the Title Transfer Facility (TTF) in the Netherlands, which is the main gas trading index in Europe, has reached $96.56 (€86.03). This price is now at its highest level since December 2022, when Europe experienced its first winter without most gas suppliers from Russia.
Gas Storage Situation in Europe
According to the provided data, storage levels in the European Union are only 74% full, significantly lower than the five-year average of about 86% at this time of year. This decrease in storage levels comes as the heating season approaches and concerns about gas supply during the winter are rising. The shortage of LNG supply from the Gulf, particularly from Qatar, has exacerbated the existing problems in filling the reserves.
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Winter Season Forecasts
Given the growing concerns about supply, natural gas prices in Europe have remained at levels similar to the 2022-2023 energy crisis. LNG supply from the Middle East has decreased by 80% compared to last year's volumes. Warren Patterson, Head of Commodity Strategy at ING, has noted that the market is increasingly coming to terms with the reality that LNG supply from the Gulf may be largely absent in global markets for most of the winter season. This competition between Europe and Asia for spot LNG keeps prices sustained.
Consultants Timera Energy have warned in their winter forecasts that prices could rise sharply if there is colder weather in Europe or Asia or if new supply disruptions occur. These forecasts indicate that as Europe enters the winter season with below-normal storage levels and Asia utilizes demand flexibility, the risk of price increases late in the winter is significant.
Ultimately, it is expected that if the Strait of Hormuz remains closed until the fourth quarter of 2026 and gradually opens in the first quarter of 2027, pressure on prices will significantly increase late in the winter, especially if European inventories decline.
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