Gas Prices Reach €97 as Winter Looms

European energy markets are entering the cold season with limited reserves and rising costs.

Wholesale gas prices hit €97 per megawatt-hour on Monday. This figure matches levels last recorded in 2022, when Russia’s invasion of Ukraine sent costs surging. Traders cited falling temperatures and increased heating demand as primary drivers for the spike.

In the United Kingdom, the month-ahead gas contract climbed 4% to 240p per therm. This represents the highest price since December 2022. Regulators noted that the country faces some of the highest energy costs in Europe this winter. The UK relies heavily on imports to maintain supply, a vulnerability stemming from decades of dependence on North Sea production. Consequently, Britain holds some of the smallest gas stores on the continent.

Global supply concerns also influenced the price rise. Reports indicated that the United States and Israel were preparing for new strikes against Iran following the US midterm elections. This geopolitical tension pushed oil to $117 a barrel on Friday. While Brent crude eased by 2% on Monday, it remains above $114 a barrel.

European gas storage levels are at their lowest point in over a decade. Current capacity stands at approximately 75% full, compared to a seasonal average near 80%. Officials attributed the shortfall to slower exports from Qatar and higher summer consumption for cooling systems.

Data from the Office for National Statistics shows the UK spent a record £4 billion on power imports in the year through August. Half of this expenditure covered electricity imported from France. The country also made near-record payments to start gas plants and compensate wind and solar farms for switching off due to grid bottlenecks.

British households expect a 16% increase in energy bills in January. This rise would bring the typical annual dual fuel bill to roughly £2,000. Stock markets reacted to the shifting energy prices on Monday. The Stoxx Europe 600 index gained 0.3%, while the UK’s FTSE 100 rose 0.4% as softer oil prices provided some relief to investors.