European gas prices hit four-year high above €88/MWh ($99/MWh) as winter storage lags

European gas prices climbed above €88/MWh ($99/MWh) on Monday, their highest level since December 2022. The Dutch TTF benchmark rose 1.57% to €88.92/MWh ($100/MWh), Trading Economics data show. As a result, prices are up 21.39% in a month and 180.15% on a year earlier.

Why European gas prices are rising

First, Gulf LNG supply remains thin. Flows from the region are about 80% lower than last year, according to Trading Economics. Qatar is reportedly exporting at only 20% to 30% of its LNG capacity, Oil Authority reported.

Second, storage is falling behind. EU sites were 74.31% full on 18 October. Two days earlier they stood at 74.10%, against 83.04% a year before. Germany was only 60.19% full.

Asia and Europe compete for cargoes

Meanwhile, the rally sharpens the contest for LNG. Asia’s JKM benchmark stood at $29.89/MMBtu on 16 October, close to European levels. So buyers in Asia, including India, must bid against Europe for the same cargoes. The gas squeeze also adds to the shipping risk driving oil prices.

What to watch

Colder weather is the main upside risk. Arne Lohmann Rasmussen of Global Risk Management thinks TTF could reach €100/MWh ($113/MWh) if conditions worsen. In addition, any recovery in Gulf exports would ease the pressure.