Europe’s Gas Refilling Assignment Is Going Well — For Now

Over the weekend, the European gas market reached a milestone: Inventories rose above 50% of capacity. Considering the low starting point, that’s no small feat: One could almost hear a sigh of relief in Brussels, London and Berlin. So far, so good.

Everything needs to continue to go smoothly for the rest of the refilling season, which runs from April to November, to declare victory. As often since the European energy crisis started in 2021, the region is largely at the mercy of outside forces.

Europe started its annual gas refilling season in a precarious state: inventories ended the 2024-25 winter at about 33.5% of capacity, well below the 55% of the previous two seasons when warm winters and sky-high prices reduced demand.

Although European gas prices have declined from the two-year high they reached in February of nearly €60 ($68) per megawatt hour, they remain higher — at about €35 — than at this time of year in 2024 and 2023.

The lower-than-normal starting point for stockpiles means Europe needs to buy lots of gas during spring and summer. With Russian supply via pipeline down sharply after the transit contract via Ukraine wasn’t renewed at the end of 2024, that means buying lots of liquefied natural gas. So far, Europe has had the LNG market to itself. On the demand side, China, typically the biggest buyer, has been absent due to low manufacturing activity, the byproduct of the trade war between Washington and Beijing. On the supply side, production is surging with more on the way from the US and Canada.

Under existing European rules, inventories need to be filled to 90% by November. But Brussels is fast-tracking new regulations that would lower the target to 83% and give flexibility around the exact date when it needs to be achieved. Germany hasn’t waited for the change; last month, it unilaterally lowered its own target to 80%.

European policymakers reason that the region doesn’t need to stockpile as much as in the past because the supply/demand balance isn’t as tight. For one thing, gas demand is lower as energy-intensive companies have shut factories; and after scant additions to supply in 2024, global LNG production capacity will surge this year and again in 2026 with projects in the US, Canada, Qatar and Mexico.

But reducing the inventory requirement isn’t cost free. It means going into the winter with a reduced insurance policy — fine if all goes well, not so great if, for example, a cold winter stresses the European market.

If the region stockpiles gas for the rest of the season at the average pace of the last three years, it should be able to hit 80% by November, meeting the new, reduced mandate. Still, that would mean Europe entering winter with the second-lowest inventory level in recent history, only behind the 77% seen at the peak of the regional energy crisis in 2021-2022 . Moreover, reaching 80% isn’t a given. There are three major risks that could leave inventories below that level unless governments step in to buy more: President Donald Trump controls two of them, with the third at the mercy of the weather.