France’s natural gas storage races to 85%, but Europe’s winter supply alert remains unresolved

⑴ The chairman of the French Gas Industry Association stated on Tuesday that France expects to reach 85% of its gas storage target by the end of October, with current reserves already filled to 75%. This is likely to avoid a shortage in supply this winter. ⑵ In contrast, the German Gas Storage Association pointed out that before the November 1 deadline, the country's storage facilities can be filled to at most 77%. Should extreme cold weather occur, supply reliability cannot be guaranteed. ⑶ Overall European natural gas storage currently stands at about 67%. Industry insiders expect gas prices to remain high for the next six months. However, unlike the crisis in 2022, the current pool of suppliers is more diversified, and pipeline transmission within the EU remains robust. ⑷ Both natural gas and wholesale electricity prices are expected to rise this winter, which will in turn dampen consumer demand. The recent sharp rise in European gas prices has been primarily driven by transport disruptions in the Strait of Hormuz following tensions between the US and Iran. ⑸ The industry expects a significant improvement in liquefied natural gas liquidity between the end of 2027 and 2028, by which time prices may fall back. In addition, in recent months, European suppliers have accelerated the termination of related contracts to comply with new regulations banning Russian gas deliveries, turning instead to other sources for procurement.