European gas prices spike to 2-year highs as storage levels falter

Just as Europe thought it had moved past the worst of its energy crisis, natural gas prices are surging once again, up 30% in the past month amid dwindling storage levels, colder temperatures, and supply uncertainties. 

With storage levels at their lowest for this time of year since winter 2022, the big question now is: can Europe refill its reserves in time for next winter? 

Why is Europe running low on gas?

Natural gas futures on the Dutch Title Transfer Facility (TTF), the European benchmark, rose to €59 per megawatt-hour on Tuesday, reaching a two-year high.  

Winter has been stubborn, dragging on with colder temperatures that have forced homes and businesses to burn through gas supplies faster than anticipated.  

Across the European Union, storage levels have dropped to an average of 48.48%, as per Gas Infrastructure Europe data, well below where they should be at this point in the year.  

France, a major energy consumer, has the lowest storage rate in the bloc at just 29.85%, while the UK and Ukraine, both outside the EU, are sitting at even lower levels—25.73% and 9.33%, respectively. In contrast, Portugal’s storage is completely full, while Sweden and Spain have healthier reserves at 88% and 69%, respectively. 

“The recent price rally was fuelled by colder-than-average temperatures, reduced renewable power generation, and low inventory levels,” said ING commodity analysts Warren Patterson and Ewa Manthey. 

Stockpiling gas is now getting more expensive

Normally, natural gas traders would start refilling storage during the spring and summer months when demand is lower and prices are more affordable. But this year, the market is making that strategy increasingly costly. 

“European gas balances have been much tighter than we expected,” said Samantha Dart, a commodity analyst at Goldman Sachs.  

“To properly rebuild storage this summer, it’s not enough for prices to simply remain above coal generation costs. They’ll need to rise even higher to attract more liquefied natural gas (LNG) to Europe.” 

Goldman Sachs estimates that LNG imports need to be 8% higher than initially expected if Europe wants to get storage levels back to at least 85% by October. So far, February’s LNG import data suggests this is possible—if prices hold near €50 per megawatt-hour ($15.10 per million British thermal units). 

But there are upside risks to gas prices. If gas demand for power generation remains unusually strong or if Asian buyers ramp up LNG imports, European prices could spike even further—potentially reaching €84 per megawatt-hour, which would be 68% higher than Goldman’s base forecast. 

Germany considers subsidies to boost storage

Germany, the EU’s biggest economy, is now weighing financial incentives to help gas suppliers refill storage.  

As reported by Bloomberg on Tuesday, Trading Hub Europe GmbH (THE), which oversees Germany’s gas market, is in discussions with policymakers about a potential subsidy scheme to encourage stockpiling. 

THE’s managing director, Torsten Frank, said no decision had been made yet, adding that discussions with the ministry and regulator were still ongoing. He indicated that once the framework was finalised, further talks could take place regarding the timing of the product’s launch. 

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The move comes as part of a broader EU effort to ensure energy security. Since Russia slashed pipeline gas supplies in 2022, Brussels has imposed strict storage targets—requiring member states to fill reserves to at least 90% by November. These measures are set to expire at the end of this year, but the European Commission is likely to propose an extension. 

Could Russian gas return to Europe?

One major wild card that could reshape the market is Russian gas. While the EU has significantly reduced its reliance on Russian energy, some gas still flows through Ukraine. If a peace deal between Moscow and Kyiv were to be reached, it could open the door for increased shipments—potentially driving down prices. 

Goldman Sachs estimates that if Russian pipeline flows returned to pre-war levels, European gas prices for summer 2025 could drop between 36% and 56% below the current forecast of €50 per megawatt-hour. However, if supplies remain restricted at 2023-24 levels, the impact would be minimal, with only a 17% downside to 2026 price projections. 

What happens next?

For now, all eyes are on the weather, LNG imports, and policy decisions in Brussels and Berlin. A colder-than-expected spring could further drain storage, while a sharp increase in Asian LNG demand could make restocking even more expensive. On the flip side, if temperatures stabilise and renewable energy output picks up, prices could ease. 

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One thing is clear—Europe’s energy security remains a delicate balancing act. As traders and policymakers navigate another volatile year, the fight to refill gas reserves is just beginning.