Germany’s gas storage is about 25% full at the start of February. This is far below recent years. A gas shortage this winter is unlikely, unless cold weather lasts well into March.
Suppliers can respond by importing more liquefied natural gas (LNG). This added flexibility helps meet demand when storage is low.
Longer Term Storage Risk
Even so, gas storage sites are expected to be less full in the coming years than they were in the past. This raises the risk of winter shortages and makes gas prices more volatile.
Storage facilities are not expected to hit the 90% target before the next heating season. That means the starting point for next winter could be worse than this winter.
If storage drops to critical levels, European suppliers may have to buy gas at much higher spot prices and/or limit consumption. Any limits would mainly affect industry, to protect household supply.
German gas storage is now at a critically low 24.8%. That is well below the five-year average of about 50% for this time of year. This is unlikely to cause an immediate shortage in the final weeks of winter, but it creates a very weak starting point for summer refilling. The market may be too relaxed because the near-term risk looks manageable.
Positioning Further Out The Curve
Strong LNG imports have been the main buffer. European terminals ran at over 85% capacity through January to meet demand. But relying on flexible LNG also exposes Europe to global price competition and possible shipping disruptions. We expect this to make it hard to refill storage quickly or cheaply in the months ahead.
The main opportunity is not in the spot market. It is further out on the curve, especially in contracts for Q4 2026 and Q1 2027. These contracts seem to price in too little risk that inventories will miss the official 90% target before the next heating season starts. We are acting on this by taking long positions in these later-dated futures.
Because higher price swings are expected, buying call options on these winter contracts is also a sensible approach. This can capture upside if prices spike due to supply fears later this year, while keeping risk capped. A higher chance of shortages should also lift implied volatility, which helps options holders.
We can look back to autumn 2025 for a clear example. The price rally then was driven by concerns about low storage going into winter. Today’s setup could lead to an even stronger version of that move later this year.
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