Europe’s gas sector is facing a critical period as the heating season draws to a close, triggering the need to replenish storage facilities, now largely empty after winter. Traditionally, traders play a significant role in restocking inventories during the summer when gas prices are lower, allowing them to profit by storing gas for future sale during the next heating season. However, this year is an exception due to the unusually cold winter depleting reserves faster than usual, exacerbated by the halt of gas flows through Ukraine in January. As a result, summer gas prices have been consistently higher than those for next winter, removing the financial incentive for storage trades.

The focus now shifts to the role governments will play in ensuring the filling of storage facilities and at what cost. Market participants will need to decide whether to start reinjecting gas despite the current unprofitable price structure or wait for better conditions. The imperative is to address the issue in the short term to prevent potential price spikes and supply risks in case of unforeseen events during the upcoming winter season.

According to European Commission regulations, storage sites must be 90% full by November 1, but discussions on flexibility regarding the targets have caused uncertainty and price fluctuations in the market. Recent developments, such as speculations on relaxed refilling targets and hopes for a ceasefire in Ukraine, have influenced market sentiment. The potential return of gas flows from Russia could alleviate the situation and lower prices, but such a scenario seems unlikely in the near future.