Europe's Gas Storage Levels Critically Low, Needs Price Surge Ahead of Winter

Europe's natural gas inventory levels are alarmingly low ahead of winter, and Goldman Sachs warns that prices need to surge by December for storage to fill up.

The Strait of Hormuz crisis has led to a shortage in liquefied natural gas (LNG) supply, with Europe competing against Asia for limited volumes. Spot LNG prices in Asia are high, making it difficult for European buyers to secure supplies.

Current storage levels are at 62% capacity, the lowest level for this time of year in nearly two decades and below the five-year average. Goldman Sachs analysts estimate that December TTF natural gas prices would need to jump above €100/MWh to incentivize accelerated stockbuilding.

This is 110% higher than their base case of €50/MWh, suggesting a significant increase in prices is necessary for Europe to manage storage through winter.