European gas reaches 3-year high as winter storage hits 13-year low

European natural gas prices reached a more than three-year high at 73.85 euros per megawatt-hour. Renewed US strikes on Iran deepened concerns about prolonged disruption to energy flows from the Persian Gulf. Dutch front-month futures had not traded at that level since the end of 2022, according to the Wall Street Journal. The contract had gained roughly 25% over the past month. The contract stood at 72.2 euros at press time. EU gas stocks were 63% full in the final week of August. The late-August average in recent years was 80%. Storage operators normally refill reserves during the summer, when demand and prices are lower. Gas analyst Greg Molnar said continued injection at the current pace could leave EU gas storage at just 72 bcm. That level would put inventories 20% below the five-year average. The shortfall would equal 19 bcm. The level would also mark the lowest storage since 2013. Molnar said low storage levels were increasing the risk of higher winter price volatility. Eurozone inflation rose 3.3% in the year to August. Inflation was 2.9% in July. Energy inflation accelerated to 14.3%. Core inflation eased to 2.4%. Escalation around the Strait of Hormuz clouded prospects for a recovery in regional liquefied natural gas exports. Roughly 20% of global LNG shipments cross the waterway. ING analysts said Europe currently outbids Asia for cargoes after shipping costs are included. ING analysts expect competition between the regions to intensify if Qatari volumes remain absent through year-end. Goldman Sachs analysts said the benchmark may need to rise above 100 euros per megawatt-hour if Middle East exports normalize only gradually through 2027. Morningstar analyst Tancrede Fulop told CNBC that a cold winter could drive prices into the 90-120 euro range. Asian equities fell after the strikes on Iran. Bitcoin reacted to the same escalation.