Commerzbank: European gas prices to stay elevated this winter
Commerzbank analyst Norman Liebke says European natural gas prices will likely remain high this winter as tight LNG supply and below-average storage levels force the region to lean on flexible LNG cargoes.
Liebke pointed to stronger competition for liquefied natural gas (LNG) as a key driver, warning that a colder-than-usual winter or a drop in LNG imports could push prices further up. He noted that low storage levels leave Europe with less of a buffer heading into the coldest months.
Still, Commerzbank flagged factors that could cushion the market. Gas consumption remains below levels seen in prior years, and a milder winter in North America or Asia could ease pressure on global LNG availability.
Under normal winter weather and typical LNG inflows of about 11 billion cubic metres a month, Commerzbank calculates European storage would drop to roughly 22% of capacity by the end of March. The bank does not expect a repeat of the extreme price spikes seen in 2022, citing lower demand and expanded LNG capacity.
Looking further out, Commerzbank expects prices to fall significantly next year to around €50 per megawatt-hour, largely on an assumed easing of the Middle East conflict. Liebke added that a return to pre-war price levels is unlikely, since a roughly 17% medium-term capacity loss in Qatar is expected to keep supply constrained until 2028, even as new capacity due in 2027 should offset a production shortfall expected in 2026.
Why it matters: European natural gas prices feed directly into regional energy costs, industrial input prices and inflation expectations, which can influence the euro and European equity indices. Tight winter supply conditions also keep energy markets sensitive to weather forecasts and LNG shipping flows.
Source: FXStreet