European Gas Storage at 73% as Equinor Warns of Market Fragility and Price Volatility
Key Facts
Equinor warned on October 28 that the European gas market was fragile, with liquefied natural gas flows through the Strait of Hormuz set to remain very limited until the conflict is resolved and travel is safe. The company’s chief financial officer said during its third-quarter results call that the market was "tight" and that a cold spell could bring significant volatility. European gas storage stood at 73% at the time of the call, the lowest level since 2011, he said. That leaves limited flexibility to handle supply disruptions or higher demand during the heating season, according to the company. Equinor is not describing the situation as a confirmed shortage, but is warning of a market vulnerable to a combination of supply constraints and cold weather.
Storage figures vary by measurement date: Equinor said inventories were at 73% at the time of its results call, while Reuters reported that European storage sites were 75% full at the start of the heating season. Reuters described that level as historically low, noting the role of inventories in meeting higher demand during winter. Analysts and industry observers cited by Reuters estimated inventories would reach 75% to 78% on November 1, about 10 percentage points below the five-year average. Inventories typically provide 25% to 30% of the European Union’s winter gas consumption. The bloc therefore remains heavily reliant on pipeline and LNG supplies to meet its needs.
Resilient Asian demand is intensifying competition for available cargoes; Equinor said it sees relatively strong demand for LNG even at current prices. That competition matters as flows through Hormuz remain limited, while Europe relies on LNG imports alongside pipeline supplies. The company said El Niño could lead to a warmer winter, which would help Europe’s tight energy market. But it added that this possibility is known and already priced into the market, according to the results call. The concerns raised by the company therefore center on the impact of colder-than-expected weather, rather than the assumption that a warm winter will solve supply problems.
Reuters said a cold spell near the end of the heating season, when inventories are likely to be at their lowest, could cause significant price volatility, with the level prices might reach difficult to predict. In an estimate cited by Reuters, northwest European inventories could fall to about 20% in early April if the winter is average and Hormuz remains closed. In a cold-winter scenario, an analyst at ABN AMRO estimated European inventories could drop to 10%–15%, a level he described as critically low for the following refill season. Equinor said it would do its utmost to deliver as much gas as possible to Europe, adding that its contract with Cheniere had started, enabling additional cargoes. Some of these cargoes are headed to Europe and others to different markets, while the contract covers the supply of 1.75 million metric tons of LNG annually.
Reuters noted that the European benchmark gas price had more than tripled during the year, reaching its highest level since the 2022 energy crisis after the closure of the Strait of Hormuz disrupted about 20% of global LNG supplies. In results published on October 28, Equinor reported adjusted operating income before tax of $12.35 billion in the third quarter and adjusted net income of $2.86 billion. Adjusted earnings per share were $1.20. The company said reported operating income was $11.95 billion, compared with $5.27 billion in the same quarter of the previous year. It attributed support for the results to higher commodity prices and strong refining margins, illustrating the effect of energy prices on the company’s performance alongside winter supply risks.
On the stock front, EL7 data showed that Equinor (EQNR) closed at $47.06 on October 27. The company announced the start of the fourth and final tranche of its 2026 share buyback program on October 29, worth up to $1.125 billion and due to end no later than February 1, 2027. Equinor is scheduled to report fourth-quarter and full-year 2026 results on February 4, 2027. The next results report will therefore come after the end of the period set for the final buyback tranche. European inventories and developments in gas flows through Hormuz will remain among the factors markets watch during the heating season.