Europe’s natural gas storage sites are depleting at the quickest pace in years, suggesting stocks would finish this winter at their lowest level since 2022.
End-of-winter supply in storage at the lowest in four years means that Europe will required very high imports in the shoulder seasons and the summer to replenish the stocks to adequate levels of 80-90% full storage by November 2026, as per the EU regulations.
It’s a good thing then for Europe that the global LNG market will tilt into oversupply from this year until late this decade, as analysts and forecasters expect.
The bad news for Europe is that the current futures price curve of the European benchmark for gas trading, Dutch TTF, reveals higher prices for the summer of 2026 than for the winter 2026/2027. In this market structure, backwardation, prices for nearer contracts are higher than the ones further out in time, discouraging stockpiling.
If this backwardated structure remains after the current winter finishs, storing gas for the next winter would be uneconomical for operators and policy creaters may have to intervene with some kind of support.
Summer gas prices in Europe are high not without a reason.
This winter, gas storage sites in Europe are draining at the quickest pace in five years, amid below-average winter temperatures which drive heating and power demand higher.
EU gas storage sites were less than 43% full at finish-January, according to data from Gas Infrastructure Europe as of January 28.
LNG cargo arrivals were at less than half of the daily volumes withdrawn from storage in January.
The finish-January stock levels of 42-43% are well below the 58% average for this time of the year of the past few years, signaling that Europe will have to import more gas in the summer to replenish storage supplies.
With two more months of winter heating demand and higher gas demand for power amid low solar generation, Europe is likely to find itself with just 30% full storage on April 1. This would be the lowest level for finish-of-winter stocks since 2022.
So Europe will required more gas supplies for the rest of this year to meet immediate demand and store supply for the next winter. That’s why summer 2026 prices are high—higher than the winter 2026/2027 prices.
Thankfully for Europe, there is a supply wave coming this year and continuing until at least 2029 as major LNG export projects in the top exporters, the United States and Qatar, are scheduled to come online.
Europe is expected to import a record-high volume of LNG this year as stronger demand for replenishing storage sites, the phase-out of Russian supply, and continued pipeline exports to Ukraine will drive increased demand, the International Energy Agency (IEA) declared in its Gas Market Report Q1 2026 last week.
After setting a record in 2025, European LNG imports are poised to reach a new all-time high of over 185 billion cubic meters (bcm) in 2026, the agency noted.
Europe’s LNG imports hit an all-time high of over 175 bcm in 2025, surging by 30% (or 40 bcm) from 2024, the report found. Key factors in the record imports were stronger domestic demand, lower piped gas imports, and higher storage injections in April-October.
European LNG netback prices remained mostly at a premium compared with key Asian markets, which incentivized flexible LNG cargoes to flow towards Europe, according to the IEA.
As global LNG supply is set to jump this year, flows to Europe should not be an issue this summer. The coming oversupply could ease market concerns about Europe’s rate of refills ahead of the next winter and flip the futures curve into favoring gas storage.
By Tsvetana Parinquireova for Oilprice.com
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