Europe is afraid of winter again - but the expert reassures: "2026 is not 2022"

We are in the middle of summer, but the European energy market is already looking towards winter with concern. Natural gas storage levels are lower than usual, exports from the Middle East are still limited, and gas prices remain high.

However, according to Norbert Rücker, Head of Economics and Next Generation Research at Julius Bär, the fear of a supply crisis is based more on the trauma of 2022 than on the current market situation.

"2026 is not 2022," he says, pointing out that gas in Europe is still trading at prices similar to the level recorded during the spike in March, even though oil prices have already fallen significantly from this year's peaks.

According to him, one reason is that exports from the Middle East have not recovered to the same extent as oil exports, partly due to the difficulty of finding alternative routes bypassing the Strait of Hormuz. As a result, gas reserves in Europe have remained less full than usual as the deficit from the previous season continues and even expands.

However, Rücker emphasizes that storage levels alone do not tell the whole story. "Europe's demand has structurally declined," he explains, against the backdrop of the transition to renewable energy, improved efficiency, and a decline in some industrial production. Therefore, the need for inventory is also lower than before. In line with current demand, storage levels are no longer at the bottom of the range but closer to the average of the last decade.

Forecasts for the winter also provide some reason for optimism. At this stage, they point to a mild and relatively windy season, which could reduce gas consumption for heating and support electricity generation from wind energy.

At the same time, the supply of liquefied natural gas continues to grow with the entry into operation of new export terminals outside the Middle East. Rücker also notes that investments in solar and batteries are reducing the demand for gas in China and other markets in Asia, thereby easing competition with Europe for LNG cargoes.

Against this background, he estimates that gas prices in Europe are too high relative to the fundamentals. However, he is cautious about betting on sharp declines because the market is still very sensitive to any threat to supply. "Energy anxiety still has deep roots," he says, "and therefore prices will likely remain overly sensitive to any bearish news."

Rücker reminds that high prices also play a role in balancing the market. In accordance with the basic mechanism of supply and demand, they encourage suppliers to direct more gas to the European market and curb consumption. According to him, this was one of the key lessons of the 2022 crisis, and even today it reduces the risk of a significant shortage.