European gas prices climb before winter as storage remains below average

UK households face a predicted 16% January energy-bill increase

The Guardian reported that European wholesale gas prices reached €97 (£81) per megawatt-hour on Monday, the highest level since 2022. The rise came as temperatures across Europe fell and traders priced in stronger demand for heating. The UK’s month-ahead contract climbed 4% to 240p per therm, its highest level since December 2022, when prices were rocketing after Russia’s full-scale invasion of Ukraine.

European gas storage stood at about 75% full, against a seasonal average closer to 80%. Reserves were at their lowest level in more than a decade, according to The Guardian, which attributed the shortfall to a slowdown in exports from Qatar and an increase in summer consumption to power refrigeration and cooling.

The price move came amid fears of further supply disruptions in the Middle East, including reports that the US and Israel had drawn up plans for renewed strikes on Iran after the US midterm elections. Those reports helped send the oil price as high as $117 a barrel on Friday. The international Brent crude benchmark retreated about 2% on Monday but remained above $114 (£85) a barrel.

Britain’s energy regulators warned that the country is expected to pay some of the highest energy costs in Europe this winter because it relies on imports to ensure a steady supply. The UK has some of the continent’s smallest gas stores after decades of reliance on homegrown production from the North Sea.

Office for National Statistics figures showed the UK paid a record £4bn on power imports in the year ending in August. Half of that spending went to electricity imported from France.

The UK also made near-record payments over the past year to fire up gas plants while wind and solar farms were paid to turn off because of bottlenecks in the grid.

British household energy bills were predicted to rise 16% in January, reaching the equivalent of about £2,000 for a typical annual bill.

European stock markets rose slightly on Monday on the weaker oil price. The Stoxx Europe 600, which tracks the continent’s biggest companies, gained 0.3% in early trading, while the UK’s FTSE 100 rose 0.4%.