European natural gas prices are trading near their highest level in more than three years as the race to replenish storage puts a bid under prices, while ongoing disruptions through the Strait of Hormuz intensify competition for scarce LNG cargoes ahead of winter.

On Tuesday morning, European natural gas benchmark futures edged up nearly 3% to trade around 75 euros per megawatt-hour, the highest level since early January 2023.

Bloomberg reporter Priscila Azevedo Rocha noted, "Europe needs higher gas prices in order to attract more seaborne cargoes to its shores, but with less than a month left until the heating season, the region’s inventories are still lagging behind."

Rocha's view was very similar to the assessment in Goldman Sachs commodities expert Samantha Dart's note last week, in which she said December 2026 TTF prices may need to exceed 100 euros per megawatt-hour to discourage Asian LNG demand.

"We have argued that, in the absence of an improvement in LNG exports through the Strait of Hormuz (SoH) (Exhibit 1), European gas prices (TTF) would need to rise to discourage Asia LNG demand, thereby freeing incremental cargoes to be sent to Europe to help manage European gas storage levels," Dart explained.

EU natural gas storage facilities were around 67% full at the start of the week, compared with a 15-year average of around 72.5% for this time of year. Readers can see the latest chart pack from MarketEar on EU natural gas here.

Separately, Timera Energy analysts wrote in a note earlier, "As the European gas market heads into winter with unusually low inventories, its flexibility to absorb further supply or demand shocks is limited," adding, "Europe is pricing up to outcompete Asia for marginal LNG."

Beyond tight gas markets, the struggling continent also has to contend with a diesel crisis. As we warned in early August, "winter is coming"...