Gas storage: What the low levels mean for prices

This figure brings back bad memories: 2.45 percent. This is the current fill level of Germany's largest gas storage facility, located in Rehden, Lower Saxony. Deep below the earth's surface, it can store about a fifth of all German gas reserves for the winter. A level as low as 2.45 percent was last recorded in the winter of 2021. Soon after, the Russian attack on Ukraine and an energy crisis with astronomical gas prices followed.

At the time, the storage facility in Rehden belonged to the Russian state-owned company Gazprom. It is now owned by the German state-owned company Sefe. Nevertheless, the question remains: Is a new crisis looming? Especially since the gas market has been volatile for months.

Natural gas used to be very cheap in the summer and quite expensive in the winter due to the higher demand during the cold season. Therefore, energy companies bought it in the summer for storage and then sold it at a profit in the winter.

In recent months, this mechanism has stopped working. It's been reversed, with winter gas even cheaper than summer gas. Therefore, it no longer made sense for energy companies to purchase the fuel for storage.

The result: The country's underground reservoirs are currently only around 52 percent full – the lowest level since the energy crisis. Across the EU as a whole, the figure is a good 60 percent, but even this isn't exactly an outstanding figure. Experts are surprised and attribute the purchasing reluctance to "great uncertainty" in the market.

The new German Minister of Economic Affairs, Katherina Reiche (CDU), also contributed to this, it is said. Completely unexpectedly, she reduced the legally required filling levels, which her predecessor, Robert Habeck (Greens), had introduced during the crisis, as of May 1. Thus, by November 1, the requirement to reach 95 percent is reduced to 70 percent.

Reiche's reasoning: The supply situation has noticeably improved. Indeed, dependence on Russia has been significantly reduced. Norway is now the most important supplier. In addition, liquefied natural gas (LNG) is available in enormous quantities and can be purchased flexibly, including in the USA – several landing terminals were built in Germany in record time for this purpose.

In this situation, Reiche wants to provide more flexibility for energy companies with her more relaxed regulations. The company THE – which purchased storage gas on behalf of the federal government during the crisis to comply with the filling quotas – is expected to largely hold back, so that the market can now sort itself out.

But something remarkable is currently happening there. At the end of June, the so-called spread reversed. Currently, methane on the TTF, the leading wholesale platform for Europe, is cheaper than for delivery in January, February, or March 2026. The old business model could therefore work again. However, only sparse amounts are still arriving at the underground methane deposits.

US President Donald Trump, with his erratic maneuvering in negotiations with the EU on tariffs and future trade relations, is also playing a key role here. Gas traders believe it's possible that both sides will agree to a massive expansion of LNG imports from the US. This could lead to a methane glut for the Old Continent, driving prices down. The result: Anyone who buys now could be too early and ultimately lose money on their deals. It's better to wait and see. But what happens if the negotiations with Trump turn out completely differently?

Sebastian Heinermann, Managing Director of the gas storage association INES, draws attention to his organization's projections. Heinermann told the RedaktionsNetzwerk Deutschland (RND): "A storage capacity of 70 percent is not enough to ensure gas supplies in a very cold winter, even if the gas storage facilities in our neighboring countries are fully filled. All LNG terminals in Germany were included in this calculation." Calculations by INES experts have shown that on individual days in the depths of winter, up to 17 percent of normal demand could theoretically not be met.

Heinermann also considers it questionable whether even the recently reduced 70 percent quota can be achieved. This is because: "Currently, less than 70 percent of gas storage capacity is booked, so even if the booked gas storage capacity is fully filled, the target cannot be assumed to be achieved." Against this backdrop, the question arises as to how the federal government intends to ensure gas supply security next winter. Rich people might then have no choice but to switch the THE back on. But, according to insiders, this would then drive gas prices up again.