European gas prices soar to four-year high over winter supply fears
European wholesale gas prices have jumped to levels not seen since 2022, reaching €97 per megawatt-hour on Monday as traders priced in stronger demand for heating amid falling temperatures.
The UK’s month ahead gas contract also rose by 4% to 240p per therm, its highest level since December 2022, when prices were soaring after Russia’s full-scale invasion of Ukraine.
The jump in prices comes as fears grow over further supply disruptions in the Middle East. Reports that the US and Israel have drawn up plans for renewed strikes against Iran have helped send the oil price as high as $117 a barrel on Friday.
The international Brent crude benchmark retreated about 2% on Monday but remains over $114 a barrel.
Low storage levels
Europe is also facing a shortage of stored gas reserves as it heads into winter. Storage is now about 75% full, against a seasonal average closer to 80%.
The shortfall is due to a slowdown in exports from Qatar and an increase in summer consumption to power refrigeration and cooling.
Britain’s energy regulators have warned that the country is expected to pay some of the highest energy costs in Europe this winter.
Record import payments
The UK paid a record £4bn on power imports over the year ending in August, according to the Office for National Statistics, of which half was spent on electricity imported from France.
It has also made near-record payments over the past year to fire up gas plants while wind and solar farms have been paid to turn off due to bottlenecks in the grid.
Meanwhile British households face growing energy bills, which are predicted to rise 16% in January to reach the equivalent of about £2,000 for the typical annual bill.
Market reaction
European stock markets rose slightly on Monday on the weaker oil price. The Stoxx Europe 600, which tracks the biggest companies on the continent, was up by 0.3% in early trading.
The UK’s blue chip FTSE 100 rose by 0.4%.
Related
