Europe is struggling to refill its natural gas storage facilities ahead of winter, raising the risk that competition with Asia for supply could drive benchmark prices above €100 per megawatt-hour for the first time since reporting began.

Dutch TTF natural gas futures, the regional benchmark, briefly climbed above €68 per megawatt-hour on Tuesday, hitting their highest level since early 2023, before easing back slightly.

Tancred Fulop, senior equity analyst at Morningstar, noted that a severe winter combined with persistent supply constraints could push gas prices to between €90 and €120 per megawatt-hour.

In a research note released on Sunday, Goldman Sachs analysts argued that if Middle East liquefied natural gas exports do not gradually recover until 2027, futures prices would need to rise above €100 per megawatt-hour to sufficiently curb Asian demand, allowing Europe to maintain storage levels through the winter.

The core concern is that Europe's gas inventories are sitting at historically low levels. The continent is currently in its storage refill cycle, but shipping disruptions in the Strait of Hormuz have sharply reduced LNG exports from major Gulf producers like Qatar. At the same time, Europe is experiencing intense summer heat, which has boosted electricity demand for air conditioning and other energy-intensive appliances, even as natural gas demand for heating and cooking typically wanes during this period.

Gas accounts for roughly one-sixth of the European Union's electricity generation. Weather conditions are also tightening supply from alternative energy sources, with high temperatures reducing nuclear power output as several plants are forced offline or run at reduced capacity, while wind generation has also been weak this summer.

Data from Gas Infrastructure Europe shows that the EU's gas storage facilities are currently about 63% full, marking a historic low for this time of year and running approximately 18 percentage points below the five-year average.

Matt Drinkwater, head of European gas at Energy Aspects, warned via email that "on the current trajectory, Europe will enter winter with insufficient buffer storage to withstand a deep cold snap. The lower the storage levels, the less gas can be withdrawn during peak demand days."

Drinkwater added that a strengthening El Niño could bring milder early winter temperatures to Northeast Asia, potentially reducing gas demand there. However, he cautioned that it "also raises the risk of colder-than-normal temperatures late in the winter."