Natural gas prices in Europe remain close to their highest levels in recent years, as markets seek to replenish depleted inventories ahead of the start of the winter season, while the crisis in the Middle East continues to create uncertainty over supplies.

Benchmark contracts rose by as much as 4% before paring their gains, with prices settling near €81 per megawatt-hour. Europe needs higher prices to attract more liquefied natural gas (LNG) cargoes and fill the gap in energy storage levels.

Storage Below Normal Levels

Natural gas storage facilities across Europe are currently around 68% full, significantly below the levels normally seen at this time of year.

Particular concern surrounds Germany, Europe’s largest energy market, where storage levels stand at just 56%.

Traders are closely monitoring the country’s market, as the German government has already discussed with state-owned energy companies ways to support efforts to replenish storage facilities.

Concerns over low inventories are affecting not only spot prices but also contracts for the following year.

Contracts for summer 2027 are now trading at a premium to those for the following winter, with the premium widening to historically high levels.

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This development makes it more expensive to replenish inventories during the summer months, meaning that Europe could face difficulties for a third consecutive year if global supply remains constrained.

The Prolonged Middle East Crisis

At the same time, the U.S.-Iran war continues to affect energy markets, restricting approximately one-fifth of global LNG flows.

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The conflict shows no signs of immediate de-escalation, while President Donald Trump has said that the crisis could be resolved after the U.S. midterm elections in November.

European natural gas prices have almost tripled since the beginning of the year, adding to inflationary pressures and weighing on the continent’s already fragile economic outlook.

At the same time, increased LNG demand from Asia raises the risk of a new wave of competition for available cargoes as temperatures fall.

Risk of Another Winter Price Surge

The outlook for the coming period remains concerning. According to market analyses, European natural gas prices could approach €100 per megawatt-hour this winter, around 20% higher than current levels, if supply restrictions from the Middle East continue.

In the event of a further escalation of the conflict, prices could even exceed €120 per megawatt-hour.

Front-month Dutch natural gas contracts, which serve as a benchmark for Europe, rose 1.3% to €81.10 per megawatt-hour.