Europe gas prices rise as EU storage hits record low for August

European natural gas prices extended gains on Tuesday as inventories across the European Union fell to record lows for August, underscoring supply tightness ahead of peak winter demand.

Benchmark Dutch TTF gas futures rose over 2% to trade near €35 per megawatt-hour, reflecting persistent concerns about storage levels and potential supply risks. Data from industry group Gas Infrastructure Europe showed EU gas storage at 59.8% full as of Monday, the lowest level for the month of August since records began.

The decline in storage levels follows reduced flows from Norway and liquefied natural gas (LNG) imports, which have struggled to offset declining domestic production and high demand from power generators. Analysts noted that the storage deficit, now at 15 percentage points below the five-year average, raises the risk of tighter supplies during the upcoming heating season.

"The low storage levels are a stark reminder of the structural shifts in Europe’s gas market since the 2022 energy crisis," said an analyst at Energy Aspects. "With limited spare capacity and elevated geopolitical risks, the market remains vulnerable to further volatility."

The European Commission has urged member states to prioritize filling storage sites ahead of winter, but progress has been uneven. Some countries, including Germany, have accelerated storage injections, while others lag behind due to infrastructure constraints or policy delays.

The tight supply outlook has also supported coal-to-gas switching in power generation, further tightening gas balances. Utilities in Europe are increasingly relying on alternative fuels, but the shift has done little to ease concerns about potential shortages or price spikes in the coming months.

European gas prices have surged over 30% since mid-July, driven by a combination of supply constraints and heightened demand for air conditioning during a recent heatwave. The European benchmark is now trading at levels last seen during the 2022 energy crisis, when prices peaked at over €300 per MWh.

Market participants will closely monitor storage data releases and weather forecasts in the coming weeks, as both will play a critical role in determining the trajectory of gas prices through the autumn and winter.