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European natural gas prices have surged by 30% in just one month. The increase is due to cold weather, weak renewable energy production, and concerns about gas supply. Storage levels are now at their lowest since 2022. This has raised fears about refilling reserves before the next winter season.

Cold Weather and Supply Shortages Push Prices Higher

The Dutch Title Transfer Facility (TTF) saw gas prices rise to €59 per megawatt-hour. This is the highest level seen in two years. Europe has been experiencing colder-than-usual temperatures. As a result, people and businesses are using more gas than expected.

Across the EU, gas storage levels have dropped to 48.48%. France has the lowest reserves, holding just 29.85% of its storage capacity. The UK and Ukraine report even lower levels. Meanwhile, Portugal, Sweden, and Spain have managed to keep stronger reserves.

Analysts from ING say that the rising prices are caused by reduced renewable energy production, cold weather, and lower gas inventories. With weak wind and solar power output, gas has become the main energy source.

High Costs Make Storage Refilling More Difficult

Gas traders usually refill storage during warmer months. However, the recent price surge is making this process much more expensive.

Goldman Sachs predicts that LNG imports must increase by 8% to reach 85% storage capacity by October. If Asian demand for LNG grows, European gas prices could rise by another 68% compared to Goldman’s base forecast.

Germany Considers Subsidies to Stabilize Gas Supply

Germany is exploring subsidies to encourage gas suppliers to refill storage tanks. The goal is to prevent shortages next winter.

Trading Hub Europe GmbH (THE) is currently discussing financial incentives with policymakers. The EU has imposed strict storage targets, requiring member states to reach 90% capacity by November. If countries fail to meet this goal, gas shortages and price spikes could follow.

Could Russian Gas Return to Europe?

The EU has worked to reduce its reliance on Russian energy. However, some Russian gas is still flowing through Ukraine. If peace talks lead to a resolution, increased Russian gas shipments could significantly lower prices in Europe.

Goldman Sachs estimates that if Russian gas supply returns to pre-war levels, summer 2025 prices could fall by up to 56%. This would provide relief for both businesses and consumers.

For now, the direction of European gas markets depends on several factors. Weather conditions, LNG imports, and political decisions will all play key roles in shaping prices in the coming months.

For more updates on global financial trends, visit Financial Mirror.