Will Europe make it before winter?

Despite local pullbacks, the price of European gas futures is still following a clear upward trend. The chart price is currently holding around ~€63.

From a technical analysis perspective, the €64 area is a key price level to watch. A sustained break above it would change the current technical structure; one of the levels implied by the 161.8 Fibonacci projection is an area roughly 25% above the current price. Source: xStation5

From a fundamental standpoint, there are a number of factors that currently support, but do not guarantee, further price increases.

The supply side is clearly tight, although despite unfavorable circumstances it is not without a response.

Source: Bloomberg Finance 

Estimated storage levels have broken below the maximum seasonal trend, setting a multi-year record. As of today, European storage facilities are filled to the lowest level in the last 10 years, including the turbulent 2022 to 2023 period.

Currently, European storage fill according to Bloomberg data is around ~61% versus a seasonal average of ~71%.

Source: Bloomberg Finance

More interesting is the shipping situation. Despite the blockade of the Strait of Hormuz in February and being cut off from key producers such as Qatar, the amount of gas at sea rose by several hundred percent, reaching a multi-year high in April.

However, the supply situation is not clear-cut.

Looking at import data, August shows a clear divergence between Europe and the rest of the world. Imports in India, Egypt, and Taiwan fell by 5% to 20%. In Europe, mainly France, the Netherlands, and Spain, imports are holding at 2025 levels or exceeding them. On the supply side, apart from Qatar and other Persian Gulf countries mentioned earlier, all natural gas producers such as Russia, Australia, and the US are maintaining or accelerating production.

Importantly, record-low levels were not recorded in 2022/2023 but in 2016/2017/2018, when exceptionally low temperatures forced higher consumption. In practical terms, this means Europe has a meaningful chance of avoiding shortages or even a sharp price surge from current levels, but only if average winter temperatures turn out to be within the normal range.