European gas inventories hit lowest seasonal level since 2011 as Hormuz disruption lifts winter price risk
EU storage is running 12 percentage points below last year, while analysts warn competition for LNG cargoes and a cold winter could push prices sharply higher.
European gas inventories have fallen below 58%, the lowest level for this time of year since 2011 and 12 percentage points below a year earlier, after disruption in the Strait of Hormuz curtailed Qatari LNG flows and tightened competition with Asian buyers for cargoes. The Dutch TTF front-month contract nearly doubled from about €31 per megawatt-hour before the war to almost €60 in late July, then eased to around €53 on expectations of a U.S.-Iran peace agreement before rising 2.2% on the 6th to about €54.50; UK wholesale gas climbed more than 2.4% to 134.20 pence per therm. Analysts say backwardation is discouraging storage injections and warn winter prices could average €60-€80 per megawatt-hour if the strait normalizes, or rise as high as €110 and even €210 in more severe shortage scenarios, with higher costs likely to feed through to households and industry.
- LNG: Liquefied natural gas transported by ship after being cooled into liquid form.
- Dutch TTF: Europe's main benchmark for wholesale natural gas trading, based in the Netherlands.
- backwardation: A market structure in which near-term prices are higher than prices for later delivery.