European Gas storage remains below the seasonal average as Norwegian maintenance and German refill challenges persist, keeping the market sensitive to winter demand and likely supporting prices toward €40/MWh, Commerzbank's Head of FX and Commodity Research Thu Lan Nguyen notes.

Supply constraints keep ruropean Gas prices elevated

"EU Gas storage levels remain slightly below the average of recent years despite the recent increase. The gap has not narrowed further in recent weeks, which could be attributed to lower imports due to maintenance work at Norwegian facilities. While there have been reports indicating a resumption of Gas deliveries, new maintenance work has been announced for today at the crucial Troll Gas field, which is expected to result in further supply restrictions."

"Moreover, in Germany, the refilling of storage facilities has been more challenging. The storage level is about 6 percentage points lower than the EU average, whereas in the previous three years, Germany's storage facilities were comparatively better filled."

"Against this backdrop, nervousness in the European Gas market could quickly resurface if temperatures drop significantly in the coming weeks and heating demand rises. Additionally, a gradual recovery in industrial activity is likely to lead to increased Gas consumption (see Figure 4). Higher import demand, coupled with stable or restricted supply, would drive prices higher. We expect Gas prices to rise toward €40 per MWh in the coming months."