Natural gas prices in the European market reached their highest level since December 2022 on Friday. The reference price for natural gas in Dakar at 7 AM Amsterdam time rose by 3% to €92.30 per megawatt-hour (MWh). This price increase is attributed to ongoing tensions in the Middle East affecting the flow of liquefied natural gas from Qatar and the onset of the heating season in Europe.
Market Conditions and Their Impacts
Currently, natural gas prices in Europe are also equivalent to over $30 per million British thermal units (MMBtu). Meanwhile, Brent crude oil prices have reached $114 per barrel, reflecting concerns over potential attacks by the Houthis on Saudi Arabian energy facilities. These factors have led to increased demand for natural gas and worries about supply shortages in the market.
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Gas Storage Situation in Europe
According to published data, gas storage in Europe is only 75% full, which is over 10% less than the five-year average for this time of year. As of October 22, gas storage in the European Union was only 74.62% full, indicating a significant decline. Experts predict that gas storage may have peaked around 75%. This concerning situation is particularly significant as the heating season approaches, as European countries require more gas reserves.
With the heating season approaching and European countries still deprived of liquefied natural gas flows from Qatar, natural gas prices in Europe are highly sensitive to developments in the Gulf. Experts believe that LNG flows are likely to be absent for a large part of the Northern Hemisphere winter.
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