Europe's Gas Supplies Plummet Ahead of Winter
Europe's natural gas stores are running low ahead of winter, sparking concerns that prices could exceed €100 per megawatt-hour for the first time since the energy crisis four years ago.
The European benchmark Dutch TTF futures climbed above €68 per megawatt-hour on Tuesday, the highest level since early 2023, before easing slightly. Analysts warn that a cold winter combined with continued supply constraints could send prices to between €90 and €120 per megawatt-hour.
Tancrede Fulop, senior equity analyst at Morningstar, told CNBC that if Middle East LNG exports 'normalize only gradually through 2027', 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. Goldman Sachs analysts also said that if Middle East LNG exports don't recover, European gas prices will likely soar.
The continent's sweltering summer has boosted demand for air conditioning and other energy-hungry appliances, while disruptions to shipping through the Strait of Hormuz have sharply curtailed LNG exports from key Gulf producers such as Qatar. This has left European Union gas stores at about 63%, roughly 18 percentage points below the five-year average.