Europe Shudders over Winter Gas Fears: Germany Puts Market on Edge
By Ion Jauregui – Analyst at ActivTrades
Europe is once again sounding the alarm over a potential energy crunch this coming winter. The continent’s gas reserves—particularly Germany’s—are significantly below normal levels for this time of year, amid soaring energy demand, heatwaves, and weaker renewable generation. The result: a volatile market that anticipates a new global scramble for liquefied natural gas (LNG).
As we approach the third quarter, storage levels are well below those recorded last year. High summer temperatures and reduced renewable output are pushing up demand and straining the energy market. According to recent data, this German weakness is spreading across the EU: European gas storage is currently at around 58% capacity, compared to 76% at this time in 2024. Germany is among the most exposed, with just 52% of its storage filled. Its largest facility—Rehden—is operating at only 2.45%, down sharply from 85% a year ago. By contrast, France sits at around 60%, and Spain slightly exceeds 70%, thanks to its regasification infrastructure and pipeline connections with Algeria.
However, the issue is not just about volume. Recent heatwaves across much of the continent have driven up air conditioning use and thus electricity demand. The situation has been worsened by a sharp 40% drop in European wind power generation this July, forcing a heavier reliance on gas for backup power.
Against this backdrop, markets are already pricing in a strong uptick in LNG imports. S&P Global estimates a year-on-year increase of 50% for Q3, reflecting nervousness over a potentially cold winter and a volatile geopolitical environment. This could further drive up prices—especially if Asia, and notably China, ramps up its purchases.
Spain: Both Supplier and Consumer
Spain, traditionally reliant on Algerian pipeline gas and maritime LNG, is in a less vulnerable position than Germany. Its six regasification plants and direct link to Africa via the Medgaz pipeline offer logistical advantages, but they also place Spain at the heart of Europe’s growing LNG import pressure. In fact, Spain has become a key hub for redistributing LNG to countries with limited infrastructure, like Germany and Austria. Rising domestic demand and exports to France and others could lift local prices, particularly if Algeria curbs flow due to technical or political reasons. Additionally, the spike in temperatures and the 40% drop in wind power have increased gas usage for electricity generation. This has led to higher electricity prices across Europe. Germany has seen peaks of up to €550/MWh, while Spain has benefited from a more balanced mix of renewables and gas.
Risks and Opportunities for Spain
While Spain’s strategic position and supply diversification offer some protection, an uncontrolled surge in prices—especially if Asia aggressively enters the LNG market—could still affect Spanish consumers. On the other hand, energy companies with export or storage capacity could benefit if Central Europe sees a spike in demand.
Ultimately, the third quarter of 2025 will set the tone for the coming winter. Europe is hoping for a globally balanced LNG market and subdued Asian demand to reach a storage target of 86% by October. But if weather or geopolitics turn adverse, gas could again be at the center of an energy crisis in the heart of Europe.
Gas Prices Seek Direction: Technical Consolidation
Henry Hub Natural Gas (NGAS) is currently trading at $3.216, within a consolidation range between $2.887 and $4.037. Since late June, the bias has been slightly bearish, with moving averages crossing above the price and the RSI showing oversold levels (41.29%). The point of control sits at $3.458—just above the current level—acting as resistance. A breakout above this level could target the highs at $4.796. Conversely, support at the lower end of the range at $2.467 may activate as a downside technical objective.
In Europe, the Dutch TTF gas contract—a key benchmark on the continent—is holding around €34.220/MWh, consolidating between €31.385 and €36.899. The RSI stands at 44.28%, and moving averages continue to signal downward pressure. Still, positive delta pressure zones remain, and a breakout above €36 could push prices towards €40–42, levels last seen during prior geopolitical crises in the Middle East. A drop below €30 would trigger bearish technical signals toward €27–28, regions where industrial demand tends to rebound in spring.
The Key Once Again: Weather, Asian Competition, and Geopolitics
If winter arrives early or global tensions escalate, Europe could face another surge in prices—just as inflation seemed under control.
Conclusion: Europe’s Winter Is Being Decided in Summer
Europe’s energy balance for the winter is being determined now. If weather, Asian demand, and geopolitics do not align in its favor, the continent could be headed toward a fresh spike in gas prices. Germany, due to its structural vulnerability, may act as a trigger for broader tensions. In this scenario, countries like Spain have an opportunity to position themselves as key players in supply redistribution and market stabilization. But the risk is clear: if the pattern of scarcity and uncertainty repeats, gas could once again be the centerpiece of an energy crisis with direct consequences for households, inflation, and industrial competitiveness across Europe.
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The information provided does not constitute investment research. The material has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and such should be considered a marketing communication.
All information has been prepared by ActivTrades ("AT"). The information does not contain a record of AT's prices, or an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information.
Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance and forecasting are not a synonym of a reliable indicator of future performance. AT provides an execution-only service. Consequently, any person acting on the information provided does so at their own risk. Political risk is unpredictable. Central bank actions can vary. Platform tools do not guarantee success. Regulated status does not guarantee security.
By Ion Jauregui – Analyst at ActivTrades
Europe is once again sounding the alarm over a potential energy crunch this coming winter. The continent’s gas reserves—particularly Germany’s—are significantly below normal levels for this time of year, amid soaring energy demand, heatwaves, and weaker renewable generation. The result: a volatile market that anticipates a new global scramble for liquefied natural gas (LNG).
As we approach the third quarter, storage levels are well below those recorded last year. High summer temperatures and reduced renewable output are pushing up demand and straining the energy market. According to recent data, this German weakness is spreading across the EU: European gas storage is currently at around 58% capacity, compared to 76% at this time in 2024. Germany is among the most exposed, with just 52% of its storage filled. Its largest facility—Rehden—is operating at only 2.45%, down sharply from 85% a year ago. By contrast, France sits at around 60%, and Spain slightly exceeds 70%, thanks to its regasification infrastructure and pipeline connections with Algeria.
However, the issue is not just about volume. Recent heatwaves across much of the continent have driven up air conditioning use and thus electricity demand. The situation has been worsened by a sharp 40% drop in European wind power generation this July, forcing a heavier reliance on gas for backup power.
Against this backdrop, markets are already pricing in a strong uptick in LNG imports. S&P Global estimates a year-on-year increase of 50% for Q3, reflecting nervousness over a potentially cold winter and a volatile geopolitical environment. This could further drive up prices—especially if Asia, and notably China, ramps up its purchases.
Spain: Both Supplier and Consumer
Spain, traditionally reliant on Algerian pipeline gas and maritime LNG, is in a less vulnerable position than Germany. Its six regasification plants and direct link to Africa via the Medgaz pipeline offer logistical advantages, but they also place Spain at the heart of Europe’s growing LNG import pressure. In fact, Spain has become a key hub for redistributing LNG to countries with limited infrastructure, like Germany and Austria. Rising domestic demand and exports to France and others could lift local prices, particularly if Algeria curbs flow due to technical or political reasons. Additionally, the spike in temperatures and the 40% drop in wind power have increased gas usage for electricity generation. This has led to higher electricity prices across Europe. Germany has seen peaks of up to €550/MWh, while Spain has benefited from a more balanced mix of renewables and gas.
Risks and Opportunities for Spain
While Spain’s strategic position and supply diversification offer some protection, an uncontrolled surge in prices—especially if Asia aggressively enters the LNG market—could still affect Spanish consumers. On the other hand, energy companies with export or storage capacity could benefit if Central Europe sees a spike in demand.
Ultimately, the third quarter of 2025 will set the tone for the coming winter. Europe is hoping for a globally balanced LNG market and subdued Asian demand to reach a storage target of 86% by October. But if weather or geopolitics turn adverse, gas could again be at the center of an energy crisis in the heart of Europe.
Gas Prices Seek Direction: Technical Consolidation
Henry Hub Natural Gas (NGAS) is currently trading at $3.216, within a consolidation range between $2.887 and $4.037. Since late June, the bias has been slightly bearish, with moving averages crossing above the price and the RSI showing oversold levels (41.29%). The point of control sits at $3.458—just above the current level—acting as resistance. A breakout above this level could target the highs at $4.796. Conversely, support at the lower end of the range at $2.467 may activate as a downside technical objective.
In Europe, the Dutch TTF gas contract—a key benchmark on the continent—is holding around €34.220/MWh, consolidating between €31.385 and €36.899. The RSI stands at 44.28%, and moving averages continue to signal downward pressure. Still, positive delta pressure zones remain, and a breakout above €36 could push prices towards €40–42, levels last seen during prior geopolitical crises in the Middle East. A drop below €30 would trigger bearish technical signals toward €27–28, regions where industrial demand tends to rebound in spring.
The Key Once Again: Weather, Asian Competition, and Geopolitics
If winter arrives early or global tensions escalate, Europe could face another surge in prices—just as inflation seemed under control.
Conclusion: Europe’s Winter Is Being Decided in Summer
Europe’s energy balance for the winter is being determined now. If weather, Asian demand, and geopolitics do not align in its favor, the continent could be headed toward a fresh spike in gas prices. Germany, due to its structural vulnerability, may act as a trigger for broader tensions. In this scenario, countries like Spain have an opportunity to position themselves as key players in supply redistribution and market stabilization. But the risk is clear: if the pattern of scarcity and uncertainty repeats, gas could once again be the centerpiece of an energy crisis with direct consequences for households, inflation, and industrial competitiveness across Europe.
*******************************************************************************************
The information provided does not constitute investment research. The material has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and such should be considered a marketing communication.
All information has been prepared by ActivTrades ("AT"). The information does not contain a record of AT's prices, or an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information.
Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance and forecasting are not a synonym of a reliable indicator of future performance. AT provides an execution-only service. Consequently, any person acting on the information provided does so at their own risk. Political risk is unpredictable. Central bank actions can vary. Platform tools do not guarantee success. Regulated status does not guarantee security.
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.