European gas hits €97 a megawatt-hour as winter storage drops to 75%

Wholesale natural gas prices in Europe reached €97 per megawatt-hour on Monday. That figure marks the highest point since 2022 and reflects growing anxiety over winter supply stability and the ongoing conflict in the Middle East. Colder temperatures across the continent increased demand for heating, prompting traders to adjust prices upward.

The spike follows a period of escalating tensions in the region. Reports indicate that the United States and Israel have prepared plans for renewed strikes against Iran. These military preparations were scheduled to occur after the US midterm elections. On Friday, oil prices climbed to $117 per barrel on the back of these reports. By Monday, the Brent crude benchmark had retreated by approximately 2% but remained above $114 per barrel.

Europe’s physical gas storage levels are currently at about 75% capacity. This stands below the seasonal average of 80% and represents the lowest level in more than a decade. The shortfall results from a slowdown in exports from Qatar and higher summer consumption for refrigeration and cooling systems.

The United Kingdom faces specific challenges due to its limited domestic gas reserves. The country has relied on North Sea production for decades, leaving it with some of the smallest gas stores in Europe. British energy regulators stated that the UK is expected to pay some of the highest energy costs in the region this winter. This cost pressure stems from a heavy reliance on imports to maintain steady supply.

Data from the Office for National Statistics shows that Britain paid a record £4 billion for power imports during the year ending in August. Half of that amount was spent on electricity imported from France. The country also made near-record payments to fire up gas plants while wind and solar farms were paid to turn off due to grid bottlenecks.

British households are also facing increased costs. The typical annual dual-fuel energy bill is predicted to rise by 16% in January. This increase would bring the annual cost to the equivalent of approximately £2,000 for the average household.

European stock markets responded mildly to the price movements. The Stoxx Europe 600 index, which tracks major continental companies, rose by 0.3% in early Monday trading. The UK’s FTSE 100 index climbed by 0.4% over the same period.