Commodities
Home›Commodities›Energy›Europe heads into winter with gas storage at a two-dec…
Europe heads into winter with gas storage at a two-decade low
Europe needs to secure enough LNG to refill storage before December, but competition from Asia for cargoes that avoid the Strait of Hormuz is leaving the region behind.
Europe is entering the winter heating season with gas in storage at one of the lowest levels seen in the past two decades, leaving the region exposed to a potential winter supply crunch, OilPrice reports.
The situation has been driven by disruptions to LNG supply from Qatar after the war in the Middle East crippled shipments, while demand for filling depleted storage and meeting electricity needs during summer heatwaves remained elevated. With Qatar cargoes trapped behind the Strait of Hormuz, competition intensified for a reduced pool of readily available global LNG cargoes, pushing European gas and LNG prices to multi month highs and LNG prices to their highest level in three years.
OilPrice adds that high front month futures relative to later delivery months have discouraged storage buildup earlier in the year, but Europe has limited options and must still fight to fill storage sites to reasonably adequate levels before December.
The outlet notes one potential mitigating factor: Europe now consumes about 10 to 15 percent less natural gas than in 2021, supported by a higher share of renewables in electricity generation and industry adjustments after moving from a period of abundant gas, including supply that had come from Russia, to tighter markets with higher prices.
Latest closeNat gas $2.918 ▲5.3%