European Gas Spikes to €97 as Winter Reserves Hit Decade Low

European wholesale gas prices reached 97 euros per megawatt-hour on Monday, a level not recorded since 2022. The surge coincided with falling temperatures across the continent and increased trading activity as market participants priced in higher heating demand.

The price increase reflects growing anxiety over winter supply stability, driven by geopolitical developments and physical storage deficits. Reports indicate that the United States and Israel are preparing plans for renewed strikes on Iran following the US midterm elections. These developments previously pushed oil prices to 117 dollars per barrel on Friday. While Brent crude retreated by approximately 2% on Monday, it remains above 114 dollars per barrel.

Physical reserves in Europe are at their lowest point in more than a decade, complicating the supply outlook. Storage levels stand at 75% capacity, down from a seasonal average near 80%. This shortfall results from a slowdown in exports from Qatar and elevated summer consumption for refrigeration and cooling systems.

The United Kingdom faces a similar strain on its energy infrastructure. Regulators expect the country to pay among the highest energy costs in Europe this winter. This projection follows years of reliance on imports after domestic North Sea production declined. The UK possesses some of the smallest gas storage facilities in the region. According to the Office for National Statistics, the UK spent a record 4 billion pounds on power imports over the year ending in August, with half of that cost attributed to electricity purchased from France.

Grid constraints have also increased costs, as the country made near-record payments to operate gas plants while wind and solar farms were paid to reduce output. For consumers, the financial impact is expected to be immediate. British household energy bills are predicted to rise by 16% in January, bringing the typical annual dual fuel bill to approximately 2,000 pounds.

Equity markets reacted with modest gains on Monday. The Stoxx Europe 600 index, which tracks the largest companies in the region, rose by 0.3% in early trading. The UK’s FTSE 100 index climbed by 0.4% during the same period.