a mirage
The European gas picture remains a temporary paradox. The market has been flooded with supply while demand softens, a pattern driven by high prices that dampen industrial activity and unusually warm weather that reduces heating needs. As a result, gas prices have fallen sharply compared with recent months, even as dozens of LNG vessels sit idle, waiting to unload around the continent.
Gas reserves in the major European nations are near full capacity, with Spain reporting about 93% according to Agsi data, and other nations close to the 100% mark, notes Pedro Cantuel, a gas and electricity market analyst at IGNIS Energía. Despite warehouses running full, ships continue to arrive at European and Spanish terminals, signaling an oversupply. In the short term, daily gas prices have plunged in Spain and France thanks to more flexible supply systems and diverse suppliers. For context, Spain’s Mibgas price hovered around 30 euros per megawatt hour this week, while Europe’s benchmark Dutch TTF climbed to about 60 euros.
Earlier this week, Enagás, the operator of Spain’s gas system, limited the entry of methane tankers because storage tanks at regasification plants were at very high levels. The curbs are projected to continue into the first week of November. Reuters reports that 35 tankers were on Spain’s coastline before reaching ports. Antonio Canseco, who leads Axpo Iberia’s gas operations, estimates the daily cost of hiring these vessels at roughly $400,000.
What’s driving this oversupply? Weak industrial demand combined with historically high prices this year across Europe. A revealing comparison shows the raw material price rising from about 20 euros per megawatt hour to around 200 during the peak, driven by Russia’s reduction in gas imports. Yet high temperatures across the continent have cooled expectations, dampening demand for heating more than expected.
University of Zaragoza professor José María Yusta points to Russia’s strategy of using the gas tap as a lever to influence markets. Since June 2021, Moscow has tightened supply to push prices higher, and even after Nord Stream events and European Commission talk of intervention in the Dutch TTF benchmark, many speculators have exited the market. As Yusta notes, there are few bold market announcements left to drive activity.
concern or mirage
Analysts agree the current conditions are unlikely to last. Prices appear overly optimistic given the storage status and evolving demand. Canseco cautions that futures markets may misread the scene: while spot prices linger around 30–40 euros, December contracts are trading well above 100 euros per megawatt hour. The reason is simple: immediate supply-demand pressure is looser now, but December demand could tighten once seasonal needs return and production remains constrained.
Stability of supply remains the key focus. Norway’s production levels, the rate at which reserves deplete, and the ongoing ability to move LNG to Mediterranean and European hubs are all critical. Cantuel adds one more variable: Asia’s response to current price levels. If Asian buyers view prices as fair, they may absorb more gas, pulling vessels toward Asia and tightening Europe’s supply and pricing.
A longer winter worries the industry. Gas storage in Europe could cover a portion of annual demand, yet the risk lies in a winter surge that could test readiness. Yusta notes that storage facilities currently hold a substantial portion of Europe’s annual needs, but preparation for a fresh draw is uneven. The European strategy since March has aimed to reach 80% storage by October and 90% by November, a goal that public reporting indicates is progressing, albeit with uncertainties about future Russian supply.
Overall, the energy landscape in Europe appears tense but not terminal. Market players stress that today’s low prices do not guarantee a lasting trend. The balance of supply, demand, and strategic reserves will determine the path through the coming months, with Asia, European storage, and LNG ship traffic acting as the key levers.