What's going on?

Data out this week showed that Europe�s already closing in on its gas storage targets.

What does this mean?

Russia�s been cutting the amount of natural gas it sends into Europe for months, and that supply�s about to drop even lower as the Nord Stream � one of the main pipelines between Russian and Europe � undergoes unexpected maintenance starting this week. But Europe�s been preparing for this: the region upped the minimum required level of its reserves earlier this year, and it�s been building those stockpiles as fast as it can. After all, those reserves typically provide around 30% of the fuel used during frosty European winters � and they�ll probably account for even more now there�s less imported gas to go around. While hoarding gas won�t solve all of Europe�s energy problems, it�s still good progress: European Union reserves were filled to nearly 80% last week, meaning the region�s hit its November target a whole two months early.

Why should I care?

The bigger picture: China�s trash is Europe�s treasure.
Europe did benefit from a stroke of good luck: China�s sputtering economy has pushed the world�s biggest buyer of liquefied natural gas to sell off surplus supplies, and Europe jumped at the chance to buy some for its reserves. But recent history�s warned the region against depending on one supplier, so it�s been trying to upgrade its own renewable energy infrastructure and bolster its energy imports from the Middle East and US as well.

For markets: Good news, bad reaction.
News of healthier-than-expected supplies sent Europe�s natural gas prices plunging by the most since March, a welcome change from their steep incline over the last few months. Mix that with data out on Tuesday that showed inflation expectations at their lowest since spring, and that�s, uh� still not enough to put a smile on dejected European faces. In fact, consumers and businesses are the most pessimistic they�ve been about Europe�s economic outlook since the Covid-ridden January 2021.