European gas storage refill rates are increasingly diverging from historical norms as tighter LNG market conditions, reduced Russian pipeline supply and shifting Atlantic cargo flows raise fresh concerns over Europe’s ability to comfortably replenish inventories ahead of winter.
There are some interesting dynamics this year in the rate of injections/withdrawals into/from European gas storage.
Withdrawals collapsed in March when the Strait of Hormuz was closed and ~20% of global LNG trade was lost. Now, however, it is injections that are running well below normal.
This may be statistical noise, but we think it more likely reflects US LNG being redirected to Asia. There were several stories about this around 3-4 weeks ago.
Given the lag time of the trans-Atlantic crossing, the loss of these loads should indeed have started showing up in the European supply/demand balance about a week ago.
Europe will have a hard time hitting its refill targets in the current situation, given the shortage on the LNG market and having all but completely rejected Russian pipeline gas. It will get more difficult next year, when the EU completely rejects Russian LNG.
Source: Ronald Smith via LinkedIn
