Europe enters the countdown to heating season with gas inventories at their lowest level in 17 years, and less supply available to buy than in 2022. Buyers are racing against a January ban on Russian LNG and stiff competition from Asia, with traders still hesitating over when to commit.
Storage sits at a 17-year low
With less than three months left before heating season begins across much of Europe, the region's natural gas inventories have fallen to their lowest point in 17 years, and the supply available for purchase is tighter than it was in 2022. Europe needs to start buying now, or risk running short once winter demand kicks in.
The bloc also enters this season already behind: it ended last winter with less gas in storage than the five-year average, and a run of summer heatwaves pushed cooling-related demand higher than usual. Summer is normally the season when traders refill storage cheaply — this year that window narrowed.
A Russian LNG ban tightens the field further
Europe leans on U.S. LNG after cutting most Russian pipeline gas, but competition with Asian buyers for that cargo is intensifying. The squeeze is about to get worse: the European Union's ban on all Russian LNG purchases takes effect from January, after EU purchases of Russian LNG hit an all-time high this year. Belgium, seat of the EU's executive and legislative institutions, sourced all of its gas from Russia last month, according to a Brussels Times report cited by Oilprice.com.
Gas traders are meanwhile in a wait-and-see mode, wary of paying too much for gas that could trade lower by the time they sell it to power generators. But that caution carries its own risk, as prices could move higher the closer Europe gets to winter. According to Bloomberg, governments could force traders to start buying to guarantee enough gas in storage by November 1 — a step that would only shift the timing of the bidding war with Asian importers, not prevent it.
Prices have already doubled since February
Natural gas prices are already twice as high as they were before the United States and Israel first struck Iran on February 28, a conflict that triggered Iran's closure of the Strait of Hormuz. Six months later, the strait remains closed and LNG flows out of the Persian Gulf remain a trickle. Gas consumption on the continent can rise as much as twofold in winter, and pipeline flows from Norway, Algeria, Azerbaijan, and Russia via Turkey cannot cover all of that demand on their own.
Source: Oilprice.com
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