European gas prices may rise 30% in Q4 2026 amid low storage: BofA

European gas prices could rise 30% above market expectations in Q4 2026 as winter approaches with gas storage at its lowest in over a decade, a Bank of America report warns. Prices are forecast to hit 100 euros/MWh, a 60% quarterly jump.

European gas prices could rise around 30 per cent above current market expectations in the fourth quarter of 2026 as the region enters the winter season with gas storage levels at their lowest in more than a decade, according to a Bank of America (BofA) report.

The bank expects European gas prices to average around 250 pence per therm, or 100 euros per megawatt-hour, between October and December 2026. This would mark an increase of nearly 60 per cent from the previous quarter.

“Our 4Q26 base case scenario for European gas sits ~30% above the current forward curve price at ~$200/boe,” the report said.

Low Storage Levels to Exert Pressure

According to the report, European gas storage levels stood at around 73 per cent in early October, compared with 83 per cent during the same period last year. Lower storage levels could put further pressure on prices as demand for heating increases during winter.

Outlook for Energy Producers

BofA said it continues to favour exploration and production (E&P) companies that are more sensitive to changes in gas prices than oil prices, as rising gas prices could support their earnings.

European gas prices have been rising through 2026, and the bank expects the trend to continue in the fourth quarter. Gas prices in Europe have also moved above Brent crude prices on an energy-equivalent basis, a trend that BofA expects to persist during the quarter.

Crude Oil Forecast

The bank's outlook for crude oil prices is relatively less bullish. It expects Brent crude to average around USD 100 per barrel in the fourth quarter of 2026. For the full year, BofA expects Brent prices to average USD 91.6 per barrel in 2026 and USD 80.3 per barrel in 2027. These estimates are higher than its earlier forecasts of USD 85.3 per barrel for 2026 and USD 74.8 per barrel for 2027.

Stronger Cash Flows Expected for E&P Firms

The report also expects European exploration and production companies to generate stronger cash flows in the third quarter. Aggregate earnings for the companies covered by the bank are estimated to be around 10 per cent above market expectations, while organic cash flow estimates are 14 per cent higher than market consensus.

The outlook for energy producers will depend on how gas prices move during the winter heating season and whether the expected increase in prices leads to higher cash flows.

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