Europe's 66% gas storage sets up costly winter for TTF prices

European gas inventories at 66% of capacity — the lowest seasonal level in 15 years — cover only a mild winter, a vulnerability that has already pushed TTF prices to €75 per megawatt hour. Benchmark European gas prices more than doubled from year-ago levels last week, reaching their highest since late 2022, when the loss of Russian pipeline gas triggered the continent's worst energy crisis in decades.

"Based on the current volume-based assessment, storage levels in the range of 60% to 70% at the start of winter, together with further import options, will be sufficient to meet the expected winter demand," the German economy ministry said in a document prepared for a parliamentary committee meeting. The ministry acknowledged a price and volatility risk if elevated prices persist in the wake of the Iran war, which "must be distinguished from a physical gas shortage."

German underground gas caverns stood at 53% full as of Sept. 1 — the lowest in 15 years of records, according to lobby group INES — while storage facilities in the Netherlands sit at 48% of capacity. Inventories typically peak in early November; last year they topped out at 83%, or roughly 85 billion cubic meters. This year, storage is likely to peak at only 70% to 75%, according to Reuters Open Interest estimates. The European Commission said Friday that despite low storage levels, the bloc faces no immediate security-of-supply risk this winter.

The supply crunch traces to the closure of the Strait of Hormuz more than six months ago, which has choked off roughly a fifth of global LNG supplies. LNG exports from the Gulf fell more than 85% between March and August compared with a year earlier, according to Kpler data, and QatarEnergy has extended its force majeure suspension on deliveries until early November. Production growth elsewhere — particularly in the U.S. and Canada — offset about 75% of the Middle East losses, with LNG output outside the Gulf growing 18%, or around 27 billion cubic meters, in the year to the end of June, per the International Energy Agency.

The cost of getting through winter

The real issue is not whether Europe can secure enough gas to get through the winter — it is how much it will have to pay. Europe's gas import bill reached €117 billion in 2025 even as consumption remained around 17% below pre-crisis levels, according to Bruegel estimates. With benchmark prices now more than double year-ago levels, the region's import bill is likely to rise sharply again this year.

The cost burden lands at a particularly difficult moment. Europe is racing to rearm, expand AI infrastructure, and defend its manufacturing base against Chinese competition. Volkswagen recently announced the biggest restructuring in its 89-year history, and another prolonged surge in gas and power prices would worsen Europe's cost disadvantage relative to rival economies. Manufacturers would either absorb higher energy costs, squeezing profits and investment, or pass them on to consumers, reducing competitiveness.

The last time European storage entered winter at such low levels was in 2022, when the loss of Russian pipeline gas sent TTF prices to record highs above €300 per megawatt hour. The current situation differs in one key respect: Germany now has LNG import terminals it lacked in 2022, providing a supply backstop. But the market's vulnerability to a cold snap or further supply disruption remains acute. If winter temperatures run below the five-year average, storage drawdowns would accelerate, forcing utilities to compete for spot LNG cargoes against Asian buyers at precisely the moment demand peaks.

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