Gas Costs: European Prices Hit €97 as Winter Storage Drops to 75%

European wholesale gas prices climbed to €97 per megawatt-hour on Monday, a level last recorded in 2022. The spike reflects growing anxiety over continental winter supplies and the continuing conflict in the Middle East. Temperatures dropped across the region, prompting traders to account for increased heating demand in their calculations.

In the United Kingdom, the month-ahead gas contract increased by 4% to 240p per therm. This marks the highest price point since December 2022, when costs surged following Russia’s full-scale invasion of Ukraine. Market participants are also reacting to reports that the United States and Israel are preparing plans for renewed strikes against Iran after the US midterm elections.

Those geopolitical developments helped push oil prices to $117 per barrel on Friday. The international Brent crude benchmark eased by approximately 2% on Monday but remains above $114 per barrel. Meanwhile, European gas storage levels stand at about 75% full, the lowest level in more than a decade. A seasonal average is typically closer to 80%.

Energy analysts cite a slowdown in exports from Qatar and high summer consumption for refrigeration and cooling as primary drivers of the thin reserves. British regulators noted that the UK is expected to face some of the highest energy costs in Europe this winter. The country relies heavily on imports to maintain supply stability, having some of the smallest domestic gas stores in the continent after decades of North Sea production.

Data from the Office for National Statistics indicates the UK spent a record £4 billion on power imports in the year leading up to August. Half of that expenditure covered electricity imported from France. The country also made near-record payments to start up gas plants over the past year. Additionally, wind and solar farms were paid to switch off due to grid bottlenecks.

Households in Britain are preparing for a substantial increase in costs. Energy bills are predicted to rise by 16% in January. This adjustment will bring the typical annual dual fuel bill to an equivalent of approximately £2,000. The cost pressure stems directly from the elevated wholesale prices and the limited domestic buffer available to smooth out supply disruptions.

Financial markets showed slight relief on Monday as oil prices softened. The Stoxx Europe 600 index, which tracks the continent’s largest companies, gained 0.3% in early trading. The UK’s FTSE 100 index rose by 0.4% during the same period. These modest gains suggest investors are absorbing the higher energy costs while monitoring further developments in the Middle East.