Europe needs 140 LNG cargoes monthly to rebuild gas storage

Europe's record-low gas storage entering the final months of the injection season has become the dominant driver of natural gas prices on the continent.

European gas storage at 57 percent full entering August — 16 points below the five-year average — requires more than 140 LNG cargoes monthly through October to reach 80 percent before winter, per Montel analysis.

"Continued disruption to LNG flows through the Strait of Hormuz mean that pressure on Europe's gas market continues to build as winter approaches," Joachim Endress, gas market expert at Montel, said.

Net European storage injections between April and July totalled just 325 TWh, around 11 percent below the five-year average and 18 percent lower than during the same period last year. LNG arrivals averaged 105 cargoes per month between May and July, leaving a cumulative shortfall of about 72 cargoes — roughly 72 TWh of gas that could otherwise have been injected into storage. Montel's modelling projects storage at between 69 percent (low case) and 84 percent (high case) by Nov. 1, putting the EU's 90 percent target out of reach.

The shortfall has pushed TTF benchmark prices to €68.36 per megawatt-hour, the highest in more than three years, and Montel estimates Europe may need prices above €60/MWh to attract sufficient LNG away from Asian buyers. With Germany's storage at just 46 percent full, persistently negative seasonal spreads could discourage injections further and raise the risk of supply shortages and price spikes between November and March.

Asian netbacks pull US cargoes east

The loss of Qatari LNG supply contributed to the squeeze, but Montel analysis shows the larger effect came from US cargoes being redirected toward higher-paying Asian markets. US LNG deliveries to China, Japan, South Korea, Taiwan and India tripled between March and July, reaching record highs. In July, US shipments to those five markets exceeded deliveries to Europe for the first time.

The economics increasingly favored Asia. During much of the period since April, netbacks for US LNG delivered to North-East Asia were higher than those for North-West Europe. In July, the margin for sending a US cargo to Asia via the Suez Canal was as much as EUR 5/MWh higher than delivering it to Europe.

Negative spreads discourage injections

Low LNG availability has been compounded by negative seasonal spreads at Europe's major gas hubs, including the TTF. Summer contracts have remained expensive because of the immediate impact of the Middle East crisis, while winter contracts have reflected expectations that supply conditions could improve later in the year. This has removed the normal financial incentive to buy gas during summer, place it into storage and sell it during winter.

Persistently negative spreads could have longer-term implications. Extremely low utilization at facilities such as Rehden and Breitbrunn has already contributed to discussions around potential storage closures.

Gas Infrastructure Europe data shows European storage at 61.6 percent full as of late August, compared with 74 percent during the same period last year. Fatih Birol, executive director of the International Energy Agency, has warned that Europe could face serious risks this winter because of supply disruptions in the Middle East and the suspension of LNG supplies from Russia. Wood Mackenzie has flagged historically low storage levels as a risk to supply security during the winter of 2026-2027.

If storage levels remain low, natural gas prices could rise sharply between November and March, pressuring energy-intensive industries and utility costs across the Eurozone. The last time European storage entered winter at comparable levels was in 2022, when TTF prices spiked above EUR 300/MWh before the region completed its emergency refill program.

This article is for informational purposes only and does not constitute investment advice.