U.S. markets open in 2 hours 9 minutes
  • S&P Futures

    3,677.75
    -31.25 (-0.84%)
     
  • Dow Futures

    29,439.00
    -230.00 (-0.78%)
     
  • Nasdaq Futures

    11,290.50
    -86.25 (-0.76%)
     
  • Russell 2000 Futures

    1,669.00
    -17.10 (-1.01%)
     
  • Crude Oil

    77.88
    -0.86 (-1.09%)
     
  • Gold

    1,646.40
    -9.20 (-0.56%)
     
  • Silver

    18.60
    -0.31 (-1.64%)
     
  • EUR/USD

    0.9637
    -0.0051 (-0.53%)
     
  • 10-Yr Bond

    3.6970
    0.0000 (0.00%)
     
  • Vix

    32.43
    +5.08 (+18.57%)
     
  • GBP/USD

    1.0742
    -0.0115 (-1.06%)
     
  • USD/JPY

    144.3160
    +0.9960 (+0.69%)
     
  • BTC-USD

    18,998.28
    -94.14 (-0.49%)
     
  • CMC Crypto 200

    435.23
    -9.31 (-2.09%)
     
  • FTSE 100

    6,966.53
    -52.07 (-0.74%)
     
  • Nikkei 225

    26,431.55
    -722.28 (-2.66%)
     

EU Reaches Gas Storage Goal Early Despite Russian Supply Cut

·3 min read

(Bloomberg) -- The European Union met its gas storage filling goal two months ahead of target as the bloc braces for a tough winter with Russia limiting supplies and energy contracts trading at elevated levels throughout the continent.

Most Read from Bloomberg

European Commission President Ursula von der Leyen celebrated the milestone on Monday, telling an audience at an energy conference in Denmark that the reserves hit an average of 80%, a target the EU had aimed to reach by Nov. 1.

The EU bolstered its storage rules earlier this year after levels last winter turned out lower than in past years, particularly in German sites controlled by Russian exporter Gazprom PJSC, a factor that led to a jump in prices.

Gas storage helps absorb supply shocks and provides around 25% to 30% of the fuel consumed in winter. With bigger reserves, European nations are slightly better placed to face a further supply cut as Gazprom starts unexpected maintenance on the Nord Stream pipeline on Wednesday.

“We will meet the goal before the heating season despite very difficult situation on the energy market, Gazprom’s dirty games around Nord Stream 1 and several member states being already completely cut off from Russian supplies,” said Jerzy Buzek, senior member of the European Parliament. “Full gas storages will certainly not solve all our current problems, but they do allow European citizens to feel more secure and confident before the coming winter.”

In Germany, gas stores are filling up fast and are expected to meet an October domestic target of 85% full already next month, Economy Minister Robert Habeck said in a statement on Sunday.

But even with full storage sites, Germany risks not being able to make it through the winter if Russia stops gas flows, Klaus Mueller, president of the Federal Network Agency, the country’s energy regulator, said in an interview with Bloomberg News earlier this month.

The latest data on storage levels is welcome relief for the market and helped push gas and power prices down further on Tuesday after drops of 20% or more for the benchmark contracts on Monday.

Lower temperatures seen across Eastern Europe, and parts of the Iberian peninsular next week will also help nations to conserve more gas as less energy is expected to be needed for cooling.

The EU wants to cut dependence on Russia, the region’s biggest energy supplier in the past years. The flows are to be replaced by growing renewables, greater efficiency and imports of pipeline gas and liquefied natural gas from other suppliers in the Mediterranean region, Africa, Middle East and U.S.

Germany, the EU’s largest energy importer, is restarting coal power plants to save gas. It’s also racing to bring online new infrastructure to import liquefied natural gas from across the globe, with the first two floating terminals set to start this winter.

An obligatory minimum level of reserves will reinforce the security of supply this winter and in the heating seasons ahead, the European Commission said earlier this year. Von der Leyen said Monday that the bloc would also take steps to intervene in electricity markets, intervening in the short term to dampen soaring power costs and eventually seeking to break the link between gas and electricity prices.

Read more: EU Plans Emergency Steps, Structural Fixes to Power Market

In Poland, reserves were almost 100% full on Aug. 27 while Portugal’s storage was completely full. Italian storage was filled to 81%, while Hungarian to 62% and Bulgarian to 60%, GIE data showed.

French Prime Minister Elisabeth Borne, meanwhile, urged businesses to cut energy use or face possible rationing this winter if Russia halts gas deliveries.

“There could be brutal gas outages overnight and serious economic and social consequences,” she said in speech Monday, adding that “companies would be the first hit” by rationing.

With more than 90% of its gas storage currently full, France should have enough of the fuel to cope with a winter with average temperatures, Engie Executive Vice President Claire Waysand said Monday.

Most Read from Bloomberg Businessweek

©2022 Bloomberg L.P.