Gas hits €97 as winter storage drops to 75%

Wholesale gas prices in Europe reached €97 per megawatt-hour on Monday. This figure marks the highest level recorded since 2022. Traders are pricing in stronger demand for heating as temperatures across the continent drop.

The spike follows reports that the United States and Israel have drafted plans for renewed strikes against Iran. These potential actions would occur after the US midterm elections. Such fears pushed oil prices to $117 a barrel on Friday. The Brent crude benchmark fell by approximately 2% on Monday but remained above $114 per barrel.

Europe enters the winter season with gas storage levels at their lowest point in more than a decade. Current reserves are approximately 75% full. This figure is below the seasonal average of 80%. The shortage results from a slowdown in exports from Qatar and higher summer consumption used for refrigeration and cooling.

In the United Kingdom, the month ahead gas contract rose by 4% to 240p per therm. This is the highest price seen since December 2022. UK energy regulators state the country is expected to incur some of the highest energy costs in Europe this winter. The nation has some of the smallest gas stores in the region after decades of reliance on North Sea production.

The Office for National Statistics reports that the UK paid a record £4 billion on power imports over the year ending in August. Half of that expenditure covered electricity imported from France. The country also made near-record payments to run gas plants while wind and solar farms were paid to shut down due to grid bottlenecks.

British households are projected to face a 16% increase in energy bills in January. The typical annual dual fuel bill is expected to reach the equivalent of about £2,000.

European stock markets rose slightly on Monday following the drop in oil prices. The Stoxx Europe 600 index, which tracks major continental companies, increased by 0.3% in early trading. The UK FTSE 100 rose by 0.4%.