European natural gas reached, on Tuesday August 8, the highest price since January 2023, traded near 75 euros per megawatt hour on the Dutch market. The pressure results from operators who want to increase their reserves before winter and the continuation of the conflict in the Middle East between the United States and Iran. Bloomberg reports that Germany, which has the largest gas deposits in Europe, has its capacity half full, and that 77% capacity in deposits would not be sufficient to respond to an extreme cold wave in winter.
According to the Wall Street Journal, EU gas reserves were at 65% at the beginning of September, representing the lowest level in 15 years, below the seasonal average of about 80%. The publication BiGo Finance states that this level was due to a miscalculation, as the European block had been postponing gas purchases in the expectation that the Middle East conflict would have a quick resolution, allowing natural gas from Qatar to return to passing through the Strait of Hormuz at a lower price, which did not materialize.
After the start of the war between Ukraine and Russia in 2022, the European Union passed to require that member states have their storage facilities at least 90% full by November 1st. However, by 2026 this value dropped to 80%, with the signals that the EU saw in US President Donald Trump that a quick end to the Middle East conflict could be reached, which to date has not happened.
The Western Europe gas responsible at the Swiss company MET Group warned that Europe is entering winter with the lowest gas storage levels on record. However, BiGo Finance highlights that there are factors that may play in the EU's favor, such as the structural reduction in demand for gas, and the El Niño storm, whose forecasts point to it lasting until 2027, leading to Europe possibly having a warmer winter.
