European gas prices reach highest level since 2022 on supply fears

European natural gas prices climbed to their highest level in nearly four years on Monday, as the Middle East conflict continued to raise concerns about supplies for the coming winter.

According to Anadolu Agency, European gas futures traded at €97.15 per megawatt-hour (about $108.8) as of 0820 GMT. That was 3.3% above Friday's close and the highest since December 2022. The Guardian also reported wholesale prices reaching €97 per megawatt-hour on Monday.

Anadolu said liquefied natural gas flows from the Persian Gulf, which previously made up nearly a fifth of global supply, remain down by roughly 80% compared with a year earlier. The Guardian reported that colder temperatures across Europe led traders to price in stronger demand for heating.

Storage levels add to the pressure. Gas Infrastructure Europe reported that EU storage facilities were only 74.6% full, well below historical seasonal averages. The Guardian put European storage at about 75% against a seasonal average closer to 80%, and said stocks are at their lowest level in more than a decade, owing to slower exports from Qatar and higher summer consumption for cooling.

The Guardian linked the price rise to reports that the US and Israel have drawn up plans for renewed strikes on Iran after the US midterm elections. It said those reports helped push oil as high as $117 a barrel on Friday. Brent crude fell about 2% on Monday but remained above $114 a barrel.

In Britain, the month-ahead gas contract rose 4% to 240p per therm, its highest since December 2022. The Guardian said British energy regulators have warned the country is expected to pay some of the highest energy costs in Europe this winter because of its reliance on imports and small gas stores. Household bills are predicted to rise 16% in January, to roughly £2,000 for a typical year.

European shares rose slightly on Monday on the weaker oil price, with the Stoxx Europe 600 up 0.3% in early trading and the FTSE 100 up 0.4%.