EU gas stores sit at 63 percent in late August, the lowest for the date since 2013

European Union gas stores were 63 percent full in the last week of August. That is well below the 80 percent average for late August in recent years and on course to be the lowest stock level at the start of winter since 2013, according to Gas Infrastructure Europe figures cited by analysts tracking the injection season.

Greg Molnar, a gas analyst, said that if injections stay at the present pace the bloc will enter the heating months about a fifth below the five-year average. Traders have started using the phrase winter panic for the price risk that follows from a thin cushion.

The hole has three sources. Last winter ran cold at the end, so stores opened the April refill season at about 28 percent, a weak starting point. Summer heat then pushed more gas into power generation as air-conditioning load rose. On top of that, the U.S.-Israel war on Iran that began on 28 February cut LNG movements through the Strait of Hormuz, the route that normally carries about a fifth of the world's seaborne gas. Qatari and Emirati cargoes that Europe had counted on did not arrive in the volumes planners used in their models.

Country splits matter more than the EU average. Germany, which holds the largest storage capacity in Europe, is about half full. Belgium sits near 51 percent. The Netherlands, which links directly to the British market through pipelines, is around 45 percent and has already warned that it will miss its national target. Italy is in better shape at about 81.5 percent. Spain is near 73 percent. Poland has filled to about 90 percent. The Netherlands is the thin end of the system. A cold November there pulls gas out of the same North-West European pool that supplies Germany and the United Kingdom.

The commercial signal has worked against filling. Summer prices have sat above winter contracts for much of the injection season, a backwardation that makes it expensive to buy gas now and park it for December. Seasonal spreads on the Dutch TTF hub averaged about minus €1.5 per megawatt-hour from April. Injections are running almost 20 percent, or about 7.5 billion cubic metres, behind last year. Inventories are roughly 17.5 billion cubic metres, or 20 percent, below the five-year average.

The European Commission has already watered the target. Member states were told to aim for 80 percent by winter, or as low as 75 percent, to avoid bidding prices higher. Even that lower bar looks tight on current flows. Wood Mackenzie had earlier put the likely seasonal peak near 76 percent, which would be the weakest high since at least 2011.

The United Kingdom is exposed even though it sits outside the EU storage rules. It draws from the same LNG cargo list and from the Belgian and Dutch interconnectors. A tight winter on the continent shows up quickly in British day-ahead prices.

None of this means the lights go out in October. Regasification capacity in Europe is large enough, on paper, to offset thin stores if LNG arrives. The problem is that the same cargoes are being bid for in Asia, and Hormuz is still constrained six months into the Iran war. The storage number published this week is the visible part of that contest. Sixty-three percent in late August is the lowest the date has seen in thirteen years. The next eight weeks of injections will decide whether winter starts on a short reserve or a critically short one.