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EU gas stocks drop to 13-year lows ahead of winter
EU gas storage averaged about 80.0% in late August in recent years, but stood at 63.0% at the end of August, raising the risk of winter price volatility, according to a gas analyst cited by The Guardian.
Europe is heading into the winter heating season with depleted natural gas reserves, triggering what energy traders and analysts described as a “winter panic.” The Guardian Business reports the EU’s gas stocks were 63.0% full in the last week of August, well below the 80.0% late-August average in recent years and among the lowest levels ever recorded for this time of year.
At the current slow pace of gas injections, the EU is likely to enter winter with supplies about one fifth below the five year average, and at their lowest level since 2013, according to Greg Molnar, a gas analyst and professor cited by The Guardian. Molnar warned that low storage levels increase the risk of heightened winter price volatility, which could worsen with cold spells or slow wind patterns that increase gas demand.
The Guardian Business also said the UK may be especially exposed because it is one of Europe’s biggest gas consumers but has some of the lowest domestic storage capacity. The article noted the UK typically relies on imports via pipelines from Europe or tankers from the US and Middle East, and cited Centrica’s CEO Chris O’Shea, who said the UK had “almost no gas in storage” for the coming winter.
The EU’s storage levels have struggled to rise toward a watered down 80.0% target by the start of winter, the article said, pointing to export disruptions tied to the US Israel war on Iran. It also cited colder conditions at the end of last winter and higher than usual gas use for power generation during Europe’s heatwaves this summer as contributors to the depleted inventories.
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