Gas Markets: Prices Hit Four-Year High at €97

Wholesale European gas prices reached 97 euros per megawatt-hour on Monday, a level not recorded since 2022. This figure represents the highest point on the market in the last four years.

The price increase coincided with falling temperatures across the continent. Traders adjusted their forecasts to account for stronger demand for heating. The United Kingdom’s month-ahead contract also rose by 4% to 240 pence per therm. That level matches the peak seen in December 2022, when prices surged following Russia’s full-scale invasion of Ukraine.

Supply concerns in the Middle East drove much of the market movement. Reports indicated that the United States and Israel had drafted plans for renewed strikes against Iran after the US midterm elections. These reports pushed oil prices to 117 dollars per barrel on Friday. Although the international Brent crude benchmark dropped by approximately 2% on Monday, it remained above 114 dollars per barrel.

Europe faces a shortage of stored gas reserves as winter approaches. Storage facilities are currently about 75% full, compared to a seasonal average closer to 80%. This marks the lowest storage level in more than a decade. A slowdown in exports from Qatar and increased summer consumption for refrigeration and cooling contributed to the deficit.

Britain’s energy regulators expect the country to pay among the highest energy costs in Europe this winter. The UK relies heavily on imports to maintain a steady supply because it has some of the smallest gas stores in the region. Decades of reliance on homegrown production from the North Sea left the country with limited physical reserves.

Figures from the Office for National Statistics show that Britain paid a record 4 billion pounds on power imports over the year ending in August. Half of that expenditure went toward electricity imported from France. The country also made near-record payments to operate gas plants while paying wind and solar farms to shut down due to grid bottlenecks.

Households in Britain face rising costs as a result. Analysts predict the typical annual dual fuel bill will rise by 16% in January. That increase would bring the bill to the equivalent of approximately 2,000 pounds.