Europe Gas Storage Falls: Europe’s gas reserves have dropped to their lowest seasonal levels since before the 2022 energy crisis, raising concerns about supply security as winter demand accelerates withdrawals faster than usual.
According to industry group Gas Infrastructure Europe, EU storage levels stood at 490 terawatt-hours as of January 29, around 130 LNG cargoes less than a year earlier. Gas reserves are now at 43% of total storage capacity, marking the lowest level for this point in the year since Russia’s invasion of Ukraine triggered widespread energy shortages.
Germany Among Countries Seeing Faster Drawdowns
Gas withdrawals have been particularly rapid in Germany, where storage levels were lower at the start of winter due to both market dynamics and policy changes. Analysts say European storage overall was drawn down more aggressively than usual through mid-January.
Germany entered the heating season with roughly 20% less gas in storage compared with the previous year’s peak. This followed years of government-mandated storage requirements that, while designed to ensure winter readiness, had unintended market effects.
In recent years, those mandates pushed summer gas prices above winter prices, discouraging traders from economically building inventories. To address this, Germany and the EU relaxed storage targets last summer, aiming to reduce price distortions and allow more flexible storage strategies.
Supply Outlook Remains Manageable
The policy shift was based on a more balanced view of global gas markets, with expectations of increased supply from the US and Canada helping to ease concerns about shortages.
Even under extreme weather scenarios similar to the 2018 European cold wave, analysts estimate north-west Europe would still retain about 11% of gas storage by the end of March — a level considered sufficient to avoid blackouts.
Gas prices are expected to ease as winter demand fades and new supply capacity comes online later in the year.
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Investor Sentiment Turns Bullish
Investor behavior has shifted alongside tightening storage levels. Data shows hedge funds moved into net long positions in gas futures by mid-January, signaling expectations of higher prices. This marks a reversal from earlier bets on declining prices that had dominated trading since October.
As winter continues and storage levels remain under pressure, Europe’s energy markets are likely to stay volatile — even as longer-term supply fundamentals point toward stabilization later in the year.
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