European countries are faced with a sudden surplus of gas – a similar situation arose in connection with warm weather and an attempt to fill gas storage facilities ahead of the heating season. As a result of rush purchases, some storage facilities even turned out to be full, and due to low demand for fuel due to warm weather, prices are falling: for about a week, gas has been trading at around $1,000 per thousand cubic meters. This is reported by Bloomberg with reference to market participants.
However, the positive from the temporary excess of gas will be short-lived, the agency believes. Local politicians fear a sharp increase in demand with the onset of cold weather, which could provoke panic buying, which, in turn, will sharply disperse gas prices. Moreover, the authorities do not rule out new sabotages with supply sources, which could have an extremely negative impact on the market situation. Another risk is getting used to excess gas in anticipation of a sharp increase in demand in the winter.
“The surplus of gas in Europe is expected to last until at least December. It is unlikely that Europe will face a prolonged cold in November,” Giacomo Masato, lead analyst and senior meteorologist at Italian energy company Illumia, told the publication.
The temporary nature of this excess, as noted by the agency, is evidenced by the divergence in the price of delivery futures for gas in November and February. The latter are 44% more expensive, which may indicate that risks remain with gas supplies to Europe until the end of winter. The publication notes that, despite the low prices now, the key problem – the overall reduction in consumption – still remains in force.
Timera Energy estimates that in 2022 gas demand fell by only 7-9% against the EU target of 15%, which is exactly how much consumption needs to be reduced in order to successfully get through the heating season. To date, the reduction in consumption has been achieved mainly with the help of enterprises and businesses. Only weather forecasts remain positive for Europe so far: according to the agency, the temperature will remain above average until the end of November, which will significantly save on gas consumption.
At the moment, European gas storage facilities are 93.6% full on average, while, for example, German storage facilities are 97.5% full. True, current stocks will only last for two months of active consumption in the event of a sharp drop in temperature, but even in this case, Europe has everything under control. Tankers with liquefied natural gas continue to arrive in Europe: in October alone, they arrived in Northern Europe by 19% more than in September. Experts believe that the positive dynamics will continue at least until mid-January.