European Gas Market: Prices Hit €97 Amid Winter Shortages

Wholesale gas prices in Europe reached €97 per megawatt-hour on Monday. This figure marks the highest level seen since 2022. Traders pushed prices up as temperatures across the continent dropped. They are preparing for higher heating demand this winter.

The surge is driven by concerns over supply from the Middle East. Reports indicate that the United States and Israel have prepared plans for new strikes against Iran. These plans are expected to follow the recent US midterm elections. The news sent oil prices to $117 per barrel on Friday. Brent crude prices fell by 2% on Monday but stayed above $114 per barrel.

European gas storage is currently at about 75% capacity. This is the lowest level in more than ten years. The seasonal average is closer to 80%. Storage levels have declined due to slower exports from Qatar and higher summer consumption for cooling. The drop in reserves has increased anxiety about winter supply reliability.

The UK’s month ahead gas contract rose by 4% to 240p per therm. This is the highest price recorded since December 2022. That period saw spikes following Russia’s full-scale invasion of Ukraine. British energy regulators expect the UK to pay among the highest energy costs in Europe this winter. The country relies heavily on imports to maintain a steady supply.

Britain holds some of the smallest gas reserves in Europe. This is a result of decades of dependence on North Sea production. According to the Office for National Statistics, the UK paid a record £4 billion for power imports in the year ending in August. Half of that amount went toward electricity imported from France. The country also made near-record payments to run gas plants while paying wind and solar farms to stop generating power due to grid bottlenecks.

Households in the UK face rising bills. Analysts predict that dual fuel bills will increase by 16% in January. The typical annual cost will reach approximately £2,000. European stock markets showed slight gains on Monday as oil prices softened. The Stoxx Europe 600 index rose by 0.3% in early trading. The FTSE 100 index in the UK climbed by 0.4%.