Bernstein: Germany Misses Gas Storage Target, Narrowing Europe's Margin for Error in Winter Gas Supply and Demand

How large is Europe's gas storage shortfall going into winter?

On 1 November, European gas storage facilities were 74.6% full, below 82.8% a year earlier but close to the 76% assumed in Bernstein's September base case. Germany's level was just 61%, 19 percentage points below its target of at least 80% by 1 November.
Low inventories have been accompanied by rising prices: the front-month European TTF gas contract rose from 79.5 euros per megawatt-hour on 11 September to 103.7 euros on 30 October. Bernstein expects gas and electricity prices and market volatility to remain high during winter.

Bernstein's base case assumes that winter gas demand is broadly unchanged from the winter of 2024/25, liquefied natural gas (LNG) imports return to their historical monthly peak, and other supplies, including pipeline imports and local production, remain at last year's average levels.
The bank believes expanded regasification capacity makes high import volumes technically feasible, but European gas prices must remain sufficiently attractive relative to Asian prices to secure additional LNG cargoes. Under this combination, Europe can get through the winter, but inventories will still be at historically low levels at the end of the heating season.
In a stress scenario, if demand rises 5% from the winter of 2024/25 while LNG imports reach only 80% of their historical monthly peak, inventories could be insufficient and a supply shortfall could emerge. If demand repeats its level in the winter of 2025/26, Europe can get through the winter under both import scenarios, but inventories would be close to exhaustion at the end of the heating season in the low-import scenario.

Weak hydropower output could increase demand for gas-fired generation. In the third quarter of 2026, hydropower generation in Austria, Germany, Italy and France fell by 39.0%, 14.4%, 19.7% and 15.8% year on year, respectively; reservoir water levels in France and Italy were also below historical norms. If this persists into winter, increased gas-fired generation will further tighten the gas supply-demand balance.
Demand also has room to fall: a mild winter would reduce residential heating gas use, while high gas prices could curb industrial consumption. Bernstein notes that if both occur, the supply-demand and inventory outlook would be more comfortable.
If inventories are drawn down too deeply this winter, Europe will need to attract more LNG during the 2027 injection season and may continue to compete with Asia by offering attractive prices, so tight conditions could persist into the winter of 2027/28.

Bernstein believes utilities with thermal power, flexible hydropower, or electricity and gas trading operations have greater exposure to price volatility and could benefit; generators retaining unhedged power exposure in markets where gas drives electricity prices could also benefit.
The bank is also positive on market sentiment toward some integrated utilities and LNG service providers; for integrated utilities, the benefit depends on hydropower output.