European NatGas Crosses 100-Euro "Psychological Mark" As Winter Supply Fears Mount

European natural gas prices hit triple-digit territory for the first time since December 2022. The energy-stricken continent has already begun drawing from critical stockpiles, with levels well below seasonal norms, as it braces for a cold snap and continued disruption to supplies transiting through the Strait of Hormuz.

Benchmark TTF NatGas futures jumped as much as 4.1%, taking prices above 100 euros per megawatt-hour. 

US NatGas prices remain largely constrained amid ample supplies as El Niño-related warmth spreads across the Lower 48. 

The chart shows EU NatGas at 32.628 and US gas at 2.773 priced in dollars and per million British thermal units. EU NatGas is trading at about 11.8 times the US price. In other words, the chart shows a widening transatlantic energy divide.

The region's storage facilities are just 75% full, compared with a 10-year average of around 90% for this time of year.

Last week, Gas Infrastructure Europe data showed that EU natural gas inventories declined for the first time this year. This is troubling because the EU has entered the withdrawal period with seasonally low inventories, leaving limited buffers to shield the continent from back-to-back cold blasts.

What's next for Europe? 

A cold blast is expected in parts of continental Europe early next month.

Tom Marzec-Manser, director of Europe gas and LNG at Wood Mackenzie, was quoted by Bloomberg as saying, "€100 is no doubt a psychological mark and could provide some resistance to further gains."

Marzec-Manser continued, "With the geopolitical situation in the Middle East changing so much at the moment, particularly given the upcoming US midterms, it will not take much to move European gas prices even higher."

Recall that earlier this month, Goldman energy expert Daan Struyven warned that NatGas prices could reach 150 euros per megawatt-hour "by year-end if Persian Gulf LNG exports don't improve beyond 25% of normal and if the winter realizes 1 std. dev. colder than average." Read the note here.