Fast and furious: European gas storage injections hit their highest on record for the April-May period this year, slightly above the 2020 levels.
Of course the market context is very different.
In the spring of 2020, we had an oversupplied market, with Europe being the market of last resort and storage absorbing surplus LNG as a “sponge”.
At the time, concerns were arising on full tank, with storages being 70% full already at end of May.
And storage injections were supported by wide summer-winter spreads.
This time, its all the contrary. we have an extremely tight market, Europe has become the world’s premium LNG market and injections are primarily driven by two factors:
(1) stringent storage regulations and fill targets (e.g. Germany 90% full by 1st Nov);
(2) supply risks ahead of next winter.
The strong storage injections have moderated down Europe’s storage deficit, with inventory levels standing now just 9% below their 5y average.
Maintaining current injection levels would enable the EU to reach ~85% fill levels by 1st Nov, something towards the bloc should strive according to the latest storage agreement between the Council
and the Parliament.
Sustaining current injection levels would require continued strong LNG inflows into Europe through the rest of the summer and keeping demand in check…
What is your view? How will European storage fill levels evolve this summer? Could we reach the 80-85% fill target?
Source: Greg Molnar
