Gas prices on European market continue to rise, trading at highest level in nearly four years

The wholesale price of gas for the European market today exceeded 86 euros (roughly CZK 2,100) per megawatt-hour (MWh), reaching its highest level since December 2022. Supply disruptions from the Middle East and low stocks in Germany are contributing to the increase, AFP reported.

The key front-month gas futures contract at the Title Transfer Facility (TTF), a virtual trading hub in the Netherlands, was up around two percent shortly after 13:00 CEST, trading close to 86 euros per MWh. It had earlier climbed as high as 86.79 euros per MWh.

The conflict in the Middle East, which began in late February with US-Israeli strikes on Iran, has crippled shipping through the strategically important Strait of Hormuz. About a fifth of the world's liquefied natural gas (LNG) supplies normally pass through it.

"The market is grappling with the prospect that we will have to get through much of the winter in the Northern Hemisphere with limited LNG supplies from the Persian Gulf," analysts at ING said, according to AFP.

Gas storage facilities in the European Union were just under 74 percent full on Monday, according to data from Gas Infrastructure Europe (GIE). In Germany, Europe's largest gas consumer, storage facilities were just under 60 percent full, while in the Czech Republic they were around 77.5 percent full.

Statements made by analysts to the Czech News Agency (ČTK) at the end of last month indicate that prolonged, severe frosts could drive gas prices in Europe up by as much as tens of percent. "There isn't enough gas in Europe for us to ignore a harsh winter. If several weeks of severe frost hit Germany, Czechia and other countries at the same time, Europe will start competing fiercely for every additional supply. And price will be the main tool in that competition," said Martin Pacovský, investment director of the Arete Energy fund.