European Gas Tops €100 a Megawatt-Hour for First Time Since 2022 With Storage at 75%

European gas has crossed a line it hasn't crossed in nearly four years. The Dutch TTF front-month contract traded at €100.37 per megawatt-hour on Wednesday, Oct. 28, up more than 4% on the day. It was the first time above €100 since December 2022.

The contract sat near €32 before the Iran war began in late February. It has more than tripled since. It is still well short of the €340 peak hit in August 2022.

Storage is the problem

EU gas storage was 75% full on Oct. 21, according to the EU energy regulators' agency ACER. That is the lowest level for this time of year in records going back to 2009. Germany's sites are just over 61% full.

Europe ended last winter with storage at only 28%. It has struggled to refill since.

No significant Qatari LNG reached the EU this summer, ACER said. Total EU LNG imports fell 14% from a year earlier. U.S. LNG now covers about 30% of EU gas supply. Russian gas, despite the phase-out effort, still accounts for about 11%.

The pressure is not only about volume. Matt Drinkwater, head of European gas at Energy Aspects, warned clients that the continent is entering the heating season "with a much smaller safety buffer than normal." He added: "If we get a sustained cold spell, we could see prices spike well above current levels."

ACER estimates the Middle East conflict has already added €18 billion to €33 billion to Europe's gas import bill.

The Gulf supply picture

Warren Patterson, head of commodities at ING, said there is "little sign of imminent relief in Persian Gulf LNG flows." He said QatarEnergy had reportedly extended force majeure declarations for several buyers until the end of the year.

The Strait of Hormuz carries roughly a fifth of global oil and is a key route for Gulf LNG exports. On Thursday, Oct. 29, the UK Maritime Trade Operations center (UKMTO) said a tanker leaving the strait was struck by an unknown projectile. The operator reported no injuries or environmental damage.

UKMTO also reported another outbound vessel on fire about 25 nautical miles northeast of Khasab, Oman. The cause and the crew's condition were unknown. A dhow caught fire earlier about nine nautical miles north of Khasab. Regional authorities said it sank and all crew were evacuated.

Oil responded. On Friday, Oct. 30, December Brent futures, which expire today, rose $2.26 to $117.14 a barrel. The more active January contract gained $2.30 to $113.10. WTI climbed $1.94 to $103.94. Brent is on course for a monthly gain of about 13%, and WTI about 15%.

The midterm overhang

Traders are also pricing in political risk. Bloomberg News reported that Iran is bracing for a fresh U.S. bombing campaign around the American midterms and is preparing to retaliate across the Middle East. The Guardian reported that the U.S. and Israel have drawn up plans for renewed strikes after the elections. Neither government has publicly confirmed such plans.

Patterson said the outlook "appears more dire amid the risk of renewed U.S. strikes on Iran following the U.S. midterm elections next week."

Energy Commissioner Dan Jørgensen told reporters in Brussels on Wednesday: "Once again, due to geopolitical turbulence, Europe faces another energy crisis. We know that this winter will be difficult for European citizens and for our economy in general." He said bills were "skyrocketing."

Who is feeling it

French month-ahead power futures topped €200/MWh for the first time since January 2023. The UK month-ahead gas contract hit 240p a therm on Monday, Oct. 26, its highest since December 2022. British energy regulators say the country is expected to pay some of the highest energy costs in Europe this winter. Household bills are forecast to rise 16% in January, to about £2,000 for a typical dual-fuel customer.

The gap with the U.S. is stark. U.S. December gas futures sat near $3.00 per million Btu this week. Henry Hub spot settled at $2.76 on Oct. 27. Converted at the ECB reference rate, Energy News Beat calculated €100.37 at roughly $32.75 per million Btu, about ten times the American contract. That conversion is the outlet's own arithmetic, and the two contracts are not identical instruments.

Energy News Beat argues the divergence is "a policy choice, not weather." It points to U.S. storage 1.0% above the five-year average and LNG terminal feedgas near records at 19 to 20 billion cubic feet a day. The Commission, for its part, wants more output from European refineries, about a quarter of which have closed in two decades.

Scrambling for supply

On Oct. 29, German importer SEFE and commodity trader Trafigura announced a five-year supply deal. It takes effect Nov. 1 and replaces a four-year contract that expires at the end of October. Trafigura will deliver 30 TWh a year, about 3 bcm, up from 23 TWh a year. A nine-bank syndicate is providing a $1.5 billion loan, partially backed by a German government guarantee.

The EU and Canada are also meeting in Montreal on Oct. 29 and 30. A draft summit statement seen by Euronews has the two sides studying long-term Canadian LNG exports to Europe.

The immediate markers are close. Nov. 1 is the date the EU usually targets for 90% storage, against 75% as of Oct. 21. The U.S. midterms are Nov. 3. Whether any post-election strikes materialize, and whether Qatari cargoes resume before year-end, will decide if €100 gas is the ceiling or a waypoint.