European wholesale gas prices climbed to €97 a megawatt-hour on Monday, a level not reached since 2022, as falling temperatures pushed traders to price in stronger heating demand. In sterling terms the price stood at £81 a megawatt-hour. The UK month-ahead gas contract rose 4 percent to 240 pence a therm, its highest since December 2022.
Storage running low
Europe’s gas storage is at its lowest level in more than a decade. A slowdown in Qatari exports and heavier summer use of gas for cooling have both weighed on reserves. Storage is currently around 75 percent full, against a seasonal average closer to 80 percent. The UK is especially exposed, holding among the smallest gas stores in Europe while depending heavily on imports; UK spending on power imports reached a record £4 billion over the year to August.
Reports said the US and Israel had drawn up plans for renewed strikes on Iran once the US midterm elections had passed, adding a geopolitical edge to the supply concerns already in the market. Oil moved in the opposite direction. Brent crude, which touched $117 a barrel on Friday, fell by around 2 percent on Monday to near $115, even as gas prices climbed.
Household bills set to rise
The gas rally carries direct consequences for UK consumers. Household energy bills are predicted to rise 16 percent in January, which would take a typical annual dual fuel bill to roughly £2,000.
Equity markets showed only a mild reaction. The Stoxx Europe 600 rose 0.3 percent in early trading on Monday, while the FTSE 100 gained 0.4 percent.
