Europe, once fearing gas rationing this winter, has a glut

Natural gas is down more than 70% from late-August highs, in part from a burst of warm weather

Europe is suddenly sitting on a glut of natural gas, sending prices lower and easing fears of winter fuel shortages and rationing as the continent weans itself off Russian energy.

Just a few months ago, officials, executives and analysts worried that as Europe pivoted from Russian gas in the wake of Moscow’s invasion of Ukraine — and as Russia throttled exports in retaliation for sanctions — the continent wouldn’t have enough fuel for winter. 

They urged consumers and companies to conserve fuel, warned of mandatory rationing if they didn’t and bought massive amounts of shipped gas from places like the U.S. and Qatar.

Those measures — coupled with a blast of unseasonably warm weather recently — have resulted in vast supplies of gas in storage onshore and in tankers floating just off the coast.

Large machinery at a LNG port on the water in Germany

Ships are loaded and unloaded at the port of Brunsbuettel, Germany, March 1, 2022. (Frank Molter/dpa via AP / AP Newsroom)


"Supply is good," said Roland Harings, chief executive of Aurubis AG, Europe’s biggest copper producer and a major energy user. "We’re not through it. I’m not calling that it’s over now. But it looks much better than it did two months ago."

Dozens of liquefied natural gas tankers are floating offshore at European ports. While storage space and berths capable of receiving the supercooled cargo are in short supply, some traders are keeping their gas aboard ship, hoping weaker prices improve before they unload, underscoring the dramatic turnaround in markets.

Benchmark futures for gas in the wholesale market have fallen more than a tenth this week to 100 euros, about the same in dollars, a megawatt-hour. That has extended last week’s drop and mirrored a recent pullback in the U.S., which is also weather-related.

The comfortable position Europe finds itself in could be temporary. Starting next week, seasonal forecasts will be able to show with some accuracy how winter weather will affect storage. A cold, dry and windless winter could suck gas stores and hinder wind-power generation. A mild, wet and windy winter could help throttle gas demand and boost wind power.

Wind turbines

Wind turbines stand at a wind park in Marsberg, Germany, June 15, 2022.  (AP Photo/Martin Meissner, File / AP Newsroom)


A cold snap in Asia, meanwhile, could prod traders to divert gas from offshore Europe to China, Japan or South Korea.

Another risk: Gas infrastructure sometimes breaks or needs repair, which could strand some of Europe’s surplus or make it harder to get to users. Sabotage is also a risk after Western investigators have ruled that recent explosions along the Nord Stream gas lines linking Russia and Europe were intentional acts.

Still, European prices have plunged more than 70% from their all-time high in late August. They have fallen to levels last seen in June, when Russia cut supplies in what European governments described as an economic war running parallel to the invasion of Ukraine. Moscow says it is a reliable supplier and blames sanctions for the interruption.

Nord Stream Mural

A painting showing the Nord Stream pipeline is displayed on a container near the Nord Stream 1 Baltic Sea pipeline in Lubmin, Germany, July 20, 2022.  (AP Photo/Markus Schreiber, File / AP Newsroom)

Today’s mild weather is delaying the date at which Europe dips into brimming gas stores to heat homes and offices. The temperature will reach 23 degrees Celsius, or 73.4 Fahrenheit, in Paris Thursday, according to the U.K.’s Met Office. That is seven degrees Celsius above the average daily peak in October and closer to August temperatures than to typical fall conditions.

A massive effort to pivot from Russian gas supplies has also put the continent in a stronger position than feared when Moscow first slashed exports. The European Union and national governments made it mandatory to pile gas into storage while urging companies and consumers to reduce demand. Caverns and tanks across the EU are 94% full.

Government officials and company officials have greeted sliding prices with relief. Analysts say Europe is now unlikely to run dangerously low on gas unless the winter is exceptionally cold or pipelines from non-Russian suppliers incur significant damage.

The drop in prices reflects, to some extent, the limitations of European gas infrastructure. If Europe had greater storage space or more terminals that can turn supercooled gas delivered in LNG tankers back into gas, traders could keep bidding for gas to stow away for winter. But with stores close to filling up, finding room to house gas has become a challenge.

LNG Tanker sets sail

The tanker Sun Arrows loads its cargo of liquefied natural gas from the Sakhalin-2 project in the port of Prigorodnoye, Russia, Oct. 29, 2021. (Associated Press  / AP Newsroom)

So traders are selling soon-to-expire contracts to avoid taking delivery, beating down their price. Prices of gas to be delivered on the same day briefly fell into negative territory this week in the Netherlands — echoing U.S. crude’s slide below $0 a barrel at the start of COVID-19

Tankers, meanwhile, are piling up off the coast of Spain and in the English Channel, waiting to unload cargoes when the continent dips into storage and the bottleneck eases. Some traders are sending gas eastward through pipelines to Ukraine, which has spare storage.


Futures markets point to higher prices in December, when colder weather is expected to boost demand and stores will start to dwindle. Governments, regulators and power and gas grid operators including Germany have readied plans to protect the most vulnerable energy users over winter in case stores run low, for example, by imposing blackouts and cutting off non-priority industries.

Next year is expected by traders and government officials to be more difficult. Contracts for gas that will be delivered through 2023 are trading far above the current price because of the challenge Europe will face in refilling stores with little or no Russian gas. Russia is still sending a small amount of gas to Europe through Ukraine and Turkey and a small amount of LNG shipments.

Gas burner stove Nice France

Flames from a gas burner on a cooker Feb. 1, 2017, in this illustration photo taken in a private home in Nice, France.  (Reuters/Eric Gaillard / Reuters Photos)

"Europe has enough gas stored to survive this winter unless it gets very, very cold," Rystad Energy analyst Nikoline Bromander said in a note. "But the continent is not out of the woods yet: With Russian flows continuing to decline, winter 2023 will be even tougher."

Even after the decline, prices in Europe are more than seven times as high as they were two years ago, before the market began to rise in 2021. High gas prices have inflicted a heavy toll on European industry and pushed governments to commit hundreds of billions of euros to shield businesses and consumers through winter.


Data published this week by S&P Global showed German factories made their biggest output cuts since the start of the pandemic this month, raising concerns of a recession.

The EU is hashing out its next steps to bolster supplies from beyond Russia and to quell volatility in energy markets. The bloc’s executive body this month proposed a cap on gas prices in the case of haywire moves and pushed for companies to join in bidding for gas from overseas suppliers. Energy ministers from member states are due to meet Nov. 24 with the aim of adopting the package.

"The good news is that the gas price is falling," Claude Turmes, energy minister for Luxembourg, said Tuesday.

Kim Mackrael contributed to this article.