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NATGAS: European Gas Structure Supportive for Summer Refill

NATGAS
Energy BulletsBulletPower BulletsCommodities

Gas demand in Europe is up this year as prices have been more conductive to demand recently. 

  • Recently demand has shot up due to cold weather and the so called Dunkelflaute - a weather phenomenon where output from both wind and solar is very low according to Oystein Kalleklev, CEO of Flex LNG.
  • As a result, gas inventories in Europe are down 19 percentage points since start of gas season and now currently at about 75% full.
  • The previous two years only saw single-digit drops over the same period.
  • Europe has also faced higher demand vs Asia for cargoes pushing more demand on inventories.
  • Panic has not set in for supply this winter but the market now expects low storage levels at the end of the season and a rush to fill them next summer resulting in higher (contango) pricing next summer.
  • The end of Ukraine gas transit has priced into the European gas market further over the past week as the expected base case, despite attempts to try and revive a last minute deal which have looked increasingly less likely.
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Gas demand in Europe is up this year as prices have been more conductive to demand recently. 

  • Recently demand has shot up due to cold weather and the so called Dunkelflaute - a weather phenomenon where output from both wind and solar is very low according to Oystein Kalleklev, CEO of Flex LNG.
  • As a result, gas inventories in Europe are down 19 percentage points since start of gas season and now currently at about 75% full.
  • The previous two years only saw single-digit drops over the same period.
  • Europe has also faced higher demand vs Asia for cargoes pushing more demand on inventories.
  • Panic has not set in for supply this winter but the market now expects low storage levels at the end of the season and a rush to fill them next summer resulting in higher (contango) pricing next summer.
  • The end of Ukraine gas transit has priced into the European gas market further over the past week as the expected base case, despite attempts to try and revive a last minute deal which have looked increasingly less likely.