The latest data shows that the EU’s overall storage levels are at an average of nearly 94% full.

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European gas prices may have dropped to levels not seen in more than four months, but this is far from being the end of the energy crisis, four industry analysts told CNBC.

The Dutch Title Transfer Facility (TTF) is Europe’s main benchmark for natural gas prices. Russia’s invasion of Ukraine and the subsequent pressures on Europe’s energy mix have pushed natural gas prices to trade at historic levels back in August — above 340 euros per megawatt hour. However, these have significantly come down since then, ending Thursday’s session at 108.5 euros per megawatt hour.

In addition, intraday European gas prices even went negative at the start of the week — meaning that holders of natural gas paid buyers to take the cargo off their hands.

“With gas storage near full, LNG inflows in oversupply and favourable mild autumn weather, prices are doing the work to keep the system balanced as commodities trade in the present,” Ehsan Khoman, head of commodities research at MUFG Bank, told CNBC via email.

The latest data compiled by industry group Gas Infrastructure Europe shows that the EU’s overall storage levels are at an average of nearly 94% full. That’s comfortably above the 80% target the bloc had set for countries to reach by the start of November.

Some of the LNG (liquefied natural gas) orders made during the summer are arriving now, when storage is full, representing an oversupply. Temperatures in the region have also been unusually warm, with some nations currently experiencing 20 degree Celsius (68 degrees Fahrenheit) heat.

Nikoline Bromander, analyst at consultancy Rystad Energy, said high output from wind power and political agreement within the EU on cooperative measures to reduce gas prices and consumption have contributed to lowering gas prices.

But Europe’s energy crisis isn’t over, and analysts are warning European policymakers against complacency.

Europe ‘not out of the woods’

“The temptation in Europe will be to take a sigh of relief and acknowledge the hard work and tough decisions on demand and supply that have been taken,” Bromander said in a research note.

“However, a series of factors – from Asian demand for LNG potentially increasing to a lack of sufficient regasification facilities in Europe means that decision makers may feel the pressure sooner rather than later.”

One of the big question marks is what will happen to LNG demand when China fully reopens its economy. Beijing has been the biggest buyer of LNG in the world, but its zero-Covid policy has prevented its economy from operating at full capacity. If this dynamic changes in the coming months, there will be more competition for the commodity and prices could spike.

Even if this winter ends up being mild, next winter also remains a supply concern.

Tom Marzec-Manser

head of gas analytics at ICIS

Henning Gloystein, director for energy at consultancy firm Eurasia Group, told CNBC that “the current glut shouldn’t be seen as a signal though that the upcoming winter might not see energy shortages.”

“Given there’s virtually no Russian gas available in Europe, supply is tight. Once it gets cold, inventories will draw down. If there’s a late winter cold snap when stocks have been reduced, thigs could get pretty tight in early 2023, meaning possible price spikes and potential energy shortages,” Henning said, adding that “it’s therefore still very important for industry and households to try to reduce consumption.”

Tom Marzec-Manser, head of gas analytics at energy consultancy ICIS, reaffirmed the point that that weak gas prices in recent days should not be interpreted as a sign that Europe is now out of the woods when it comes to managing the lost flows from Russia.

Before Russia’s invasion of Ukraine, the EU was obtaining about 40% of all its natural gas from Moscow. That has now fallen below 10%.

“Forward pricing indicates that high prices will soon return: ICIS data shows gas for delivery in January is more than four times the price of spot gas at the TTF,” Marzec-Manser told CNBC via email.

Europe has in recent months endured a sharp drop in gas exports from Russia, traditionally its largest energy supplier.

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“Even if this winter ends up being mild, next winter also remains a supply concern as refilling storages through the summer of 2023 will be much harder than summer just gone, with little-to-no Russian gas available,” he added.

Several experts have warned that Europe’s high storage levels were to a large extent achieved with Russian gas. Even Xavier Bettel, the prime minister of Luxembourg, an EU nation, acknowledged earlier this month that storage was full with Russian gas. However, Russia supplies have been severely disrupted and it is Europe’s aim to be completely free from Russian fossil fuels.

Furthermore, there’s also the risk that European demand picks up in the coming months.

“The risk with the sell-off in the European gas market is the potential that demand starts to pick-up,” Khoman from MUFG Bank said, citing reports that fertilizer producers in Europe are easing curtailments.

“If this is part of a broader trend that we see in European demand, it would make it increasingly difficult for Europe to rebuild storage to comfortable levels ahead of next winter,” he added, projecting gas prices to average 200 euros per megawatt hour in the second quarter of 2023 and until the end of next year.

The CEO of EDP, Portugal’s utilities firm, summed it up when speaking to CNBC’s “Squawk Box Europe” Friday. “Certainly we are in a much better place than we were a couple of months ago,” Miguel Stilwell d’Andrade said, but “we should expect a lot of volatility going forward.”