The European gas market is in a unique situation this summer, viewed from a storage perspective. Q2 is already well underway but the regional facilities are on average 33pc full in mid-May, an increase of less than 4pp over the last month and a half. That is the lowest rate of growth from 1 Apr to 14 May since at least 2011.
In many countries, the UGSs have started to go into stable injection mode during the past two weeks but the filling rates still remain low. More than six weeks have passed since the start of gas summer but Europe’s storages added 4 bcm in total. From 2018 to 2020, the build in inventories over the same period averaged 13 bcm.
With limited supply in the regional market, players are actually losing valuable time accorded for restocking inventories, depleted by a record volume this past winter.
The storage issue is naturally built into prices. Just have a look at the development of the spread between Winter 21-22 and Winter 22-23, which increased fourfold since Jan, reaching €5.3/MWh on 14 May. Bearing in mind that the maintenance on the Norwegian fields should ramp up and competition for LNG cargoes with Asian buyers is intensifying, it is highly likely that this level is not the limit.
Source: Yakov Grabar
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