Europe Faces Gas Price Surge Amid Low Storage Levels

Europe's natural gas stores are running low ahead of winter, raising concerns that prices could surge to over $117 per megawatt-hour for the first time since the region's energy crisis four years ago.

The Dutch TTF futures benchmark climbed above 68 euros ($79) per megawatt-hour on Tuesday, its highest level since early 2023, according to CNBC. Analysts warn that a cold winter combined with continued supply constraints could send prices between $90 and $120 per megawatt-hour.

Goldman Sachs analysts said in a note published Sunday that natural gas futures would need to rise above $100 per megawatt-hour to curb Asian demand enough for Europe to manage its storage levels through winter. This is because disruptions to shipping through the Strait of Hormuz have curtailed LNG exports from key Persian Gulf producers, such as Qatar.

The continent's sweltering summer has boosted demand for air conditioning and other energy-hungry appliances, while nuclear generation has fallen due to weather conditions. As a result, European Union gas stores are at about 63%, roughly 18 percentage points below the five-year average.