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Europe's Gas Stores Hit Two-Decade Low Amid Price Woes
3 Aug
Summary
- European gas storage levels are at their lowest for this time of year since 2009.
- High gas prices have made winter stockpiling uneconomical for utilities.
- The war in the Middle East is diverting LNG cargoes from Europe.
European gas storage levels have reached their lowest point for this time of year in nearly two decades. As of the start of August, European Union inventories were only 57.1% full, a figure not seen in records dating back to 2009.
The ongoing conflict in the Middle East has disrupted global liquefied natural gas (LNG) supply, with Asian buyers securing available cargoes. This diversion has led to a decrease in European LNG imports since April.
High natural gas prices, approximately 80% above pre-war levels, have made the traditional practice of summer stockpiling uneconomical for utilities and traders. Consequently, net storage injections in July were 21% lower than the previous year, marking the weakest July for stockpiling since 2020.
Analysts warn of increased winter risks if global gas supplies remain tight. While physical shortages are unlikely, Europe may face significantly higher costs to secure necessary fuel, with potential price increases to €100 per megawatt-hour in December.
