European natural gas climbed above €90 for the first time in almost four years, raising the threat of a renewed energy crunch as Europe heads into the peak winter heating season. Benchmark Dutch futures rose as much as 2.4% to €90.16 a megawatt-hour, the highest since December 2022 and roughly triple their level before the Iran war. Power also jumped, with Germany's year-ahead contract reaching its highest level since July 2023.
Prices remain well below the peaks of the last energy crisis, but the latest surge is piling pressure on consumers and industry. Governments have so far resisted a return to costly price caps and tax cuts, with stretched budgets and high borrowing costs leaving little appetite for another round of energy support. Europe may have to pay up to attract enough cargoes this winter, with liquefied natural gas demand from Asia setting the stage for more intense bidding wars when colder weather sets in.
The region's gas-storage sites are now about 75% full, the lowest for the season in records going back to 2009. The situation is even more acute in Germany, the region's biggest economy, where levels are just over 61%. Mild weather this month has given European energy companies some breathing room to add fuel into storage at a faster-than-normal pace for October.
Traders remain on high alert. Gas exports from the Persian Gulf, which accounted for about a fifth of global LNG last year, remain disrupted by the war, with no recovery in sight. Asian LNG prices also jumped to their highest since 2022. Rabobank Senior Energy Strategists Florence Schmit and Joe De Laura said in a note that "geopolitical deterioration could push prices higher in the near term." Dutch front-month futures traded up 2.2% at €89.96 a megawatt-hour by 1:59 p.m. in Amsterdam.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing