A Market-Orientated Perspective on the EU’s Low Summertime Gas Storage Levels

European gas reserves are at a “historically low level,” and some commentators we follow warn the Continent is approaching an energy crisis. We reckon this sounds like the last thing Europe needs: a bleak, freezing winter following a summer of heatwaves and wildfires. But Europe has seen this movie before, and whilst energy prices could climb further this winter, we don’t think this is a given—nor is it automatically a major economic (or market) negative, based on our analysis.

As Europe stocks up on energy for the winter, EU gas storage facilities are only 54% full—the second-lowest summertime level since 2011 and lowest for July since 2021.^[i] Gas is used for power generation and industrial processes and keeps approximately 30% of EU households warm, making winter rather critical.^[ii] But the Iran war has made it harder for the Continent to replenish its gas supplies, as fighting and the blockaded Strait of Hormuz hindered shipments from the Middle East. Whilst most experts we follow don’t anticipate shortages, they warn restricted supply will keep gas prices elevated—forcing EU nations to refill their buffers at much higher prices.

But we think recent history shows high gas prices during storage refilling season needn’t spell economic doom for Europe. See 2022, when commentators globally warned of a European energy crisis after the Russia – Ukraine war erupted. The wholesale price for European gas soared from around €80 euros per megawatt-hour at the start of 2022 (itself elevated due to wind power shortages earlier that winter) to over €200 at the start of that March—and on its way to a high of over €330 that August, right when countries were trying to stock up for winter.^[iii]

Yes, those soaring energy prices caused pain throughout Europe. Higher gas prices hit Germany’s mighty chemical companies hard, and many still struggle: According to German industry association VCI, “There is no sign of a turnaround, with stagnation or further declines in production likely this year.”^[iv] But high gas prices also didn’t deliver the worst-case scenarios many commentators warned of (e.g., rationing or blackouts) or a nasty recession.^[v] Although inflation spiked in 2022—the eurozone’s harmonised index of consumer prices sped up to 10.6% y/y in October that year—we think galloping prices had less to do with energy and instead with massive money supply growth tied to Western monetary policymakers’ support measures undertaken during COVID lockdowns.^[vi] We think inflation is a monetary phenomenon of too much money chasing too few goods and services—it isn’t one specific price category (e.g., energy) driving all other prices up. As for the regional economy, though Germany had a shallow recession during that period, its soft patch didn’t derail the broader eurozone as other nations (e.g., Spain, France and even Italy) grew.^[vii]

Also worth noting: In 2022, EU nations were refilling reserves at far higher prices than today’s. (Exhibit 1) If more expensive gas didn’t cause major, regionwide economic issues then, we don’t see why it would automatically do so now.

Exhibit 1: European Gas Prices, 2022 Vs. 2026

Source: FactSet, as of 31/7/2026. Dutch TTF gas prices (the regional benchmark), weekly, 7/1/2022 – 30/12/2022 and 2/1/2026 – 31/7/2026.

As for commentators’ warnings about low reserves, euroland isn’t necessarily catastrophically short on gas. America has been ramping up its liquefied natural gas (LNG) export capacity. Last year, exporters announced plans to more than double liquefication capacity between 2025 and 2029—and some of that is coming online this year.^[viii] Whilst Middle East fighting took Qatar’s LNG production offline temporarily, the Gulf nation has been preparing for a rapid restart since April. Half its production is reportedly ready to come online within a month of the Strait reopening, which is quicker than many experts projected.^[ix]

Though headlines focus on EU member states potentially missing EU-required reserve goals (e.g., 90% storage by 1 November), these targets are relatively new. The EU established reserve targets in 2022 to maintain energy stability in response to that year’s gas price surge.^[x] But we think there is nothing inherently special or necessary about the 90% or 80% threshold. They look more like arbitrary levels to help guide member states. 

And whilst the market can be volatile in the short term, we think it usually shows whether problems are brewing first—we find it is the ultimate leading economic indicator. That today’s European gas prices are far lower than 2022’s suggests to us trouble isn’t afoot, in part because of all the gas import infrastructure improvements 2022 sparked. Warnings about Europe’s wintertime gas needs strike us as further evidence that the proverbial wall of worry bull markets are often said to climb is quite high—a reason to remain bullish, especially for opportunities outside the US.