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Europe faces tight winter gas storage and higher spot prices
EU gas storage was 57% full as of August 5, below 2011 levels for this time of year, raising the risk of missing an 80% December target.
Europe is heading into winter with natural gas storage at the lowest levels for this time of year in more than a decade, OilPrice reports. Data cited from Gas Infrastructure Europe shows EU storage sites were only 57% full as of August 5.
The article links the tighter outlook to a severely tightened global LNG market after the Iran war, which sent prices higher and shifted spot supply competition toward Asia. It also says storage has not recovered as quickly as in prior years.
Because of the thin cushion, Europe risks not meeting its indicative target to have storage 80% full at the start of December, according to OilPrice. The coverage also notes that near term LNG markets have flipped to backwardation, with prices for closer delivery higher than those further out.
Analysts cited by OilPrice warn that prices could be vulnerable to sharp spikes between November and March, particularly if winter is colder in Europe. The piece also argues that the market setup discourages stockpiling now, leaving Europe exposed to winter conditions and uncertainty around LNG flow recovery from the Middle East.
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