European Gas Prices Hit Highest Level Since November 2022
European natural gas prices rose above €96 per megawatt-hour on Monday as the conflict in the Middle East escalated. German storage sites are only 61.1% full, though the regulator says supply security is assured.
European natural gas prices climbed above €96 per megawatt-hour (MWh) on Monday, reaching their highest level since November 2022. The rise is driven by an escalating military conflict in the Middle East, which has heightened concern about gas supplies ahead of winter.
Supplies from the Persian Gulf
Before the conflict, liquefied natural gas (LNG) shipments from the Persian Gulf region made up about one fifth of global supply. They remain largely disrupted, with volumes roughly 80% below the level of the same period last year.
Storage levels
European gas storage was 74.62% full on 25 October, below the historical average for this time of year. German storage stood at 61.1% on 22 October, markedly lower than in earlier years.
The Federal Network Agency (Bundesnetzagentur), Germany's energy market regulator, nonetheless describes supply security as assured. It says it continues to monitor the situation but considers a comparatively low fill level at the end of winter likely. It attributes the recently weak injections in places to the hedging strategies of trading companies and does not regard them as critical. In its assessment, reaching the November fill targets is not strictly necessary for security of supply.
Between 14 and 20 October, 17.5 terawatt-hours of gas reached Germany by pipeline and 1.6 terawatt-hours as LNG, a total of 19.1 terawatt-hours. LNG terminals were on average 37.2% utilised. The agency describes imports as stable.
Consumer prices
Filling storage is in principle the responsibility of gas trading companies, which must also prepare for a cold winter. The agency says it has no indication that market participants are failing to meet their obligations.
Gas prices for new customers are now 14 cents per kWh, the highest since January 2023. Since the start of the year they have risen by 6 cents, or 75%. As temperatures fall, some EU countries have already begun drawing on stored reserves. With storage levels relatively low, Europe remains vulnerable to further supply disruptions and a possible rise in heating demand.
