News - Europe's Energy Crunch: Concerns about Diesel and Natural Gas Arise

As Europe prepares for the winter season, concerns about a looming energy crisis are mounting. Samantha Dart from Goldman Sachs has highlighted a potential global diesel supply shortage and troubling natural gas storage levels in Europe. Speaking on Bloomberg TV, Dart shared her worries about the diesel crisis and the concerning natural gas storage figures. In a comprehensive report to clients, she warned that European natural gas reserves are below the seasonal average, falling short ahead of the critical winter heating period. At the week's start, benchmark TTF natural gas futures dropped by 7%, settling around 54 euros per megawatt-hour. Despite this decline, Dart maintains her anticipated third-quarter end forecast of 60 euros. A notable deficit in Northwest European LNG imports, missing the July target by 2.1 million tons on an annualized basis, has left storage facilities only 43% filled by the month's end, compared to a projected 45.5%. Bloomberg's latest data adds to the concern, indicating that Europe's natural gas storage is currently 57.87% full—approximately 18 percentage points below the historical average measured from 2009 to 2025. Dart further emphasized in her note that the July shortfall in European LNG imports suggests the gas storage gap persists, and the LNG supply remains uncertain. She emphasized the need for Europe to expedite its natural gas storage inputs to reach a target of 67% by late October. Opportunities for increased storage could stem from boosted Qatari exports, decreased Asian demand, and reduced Egyptian imports. However, there is a risk that an early drop in TTF prices could redirect LNG back to Asian markets. Concerns over Middle East energy exports suggest that if recovery is slow, European gas prices in December may need to rise above 100 euros to reduce Asian demand. In contrast, if the Hormuz maritime chokepoint opens faster than expected, it could lower prices to 40 euros. Summarizing her analysis, Dart remains cautious, predicting that risks for their winter TTF pricing continue to trend upwards. By 2027, if Middle Eastern exports normalize slowly, December 2026 TTF prices may need a substantial increase over 100 EUR/MWh to significantly curb Asian LNG demand. Conversely, a swift improvement in Hormuz exports could lower TTF prices, aligning with the coal-to-gas threshold of 40 EUR/MWh. With potential disruptions in the Gulf, Europe could potentially face the winter with both natural gas and diesel reserves significantly below seasonal averages, possibly leading to another surge in energy costs. For more detailed insights, professional subscribers can visit the new Marketdesk.ai portal to access exclusive NatGas research notes.