Natural gas: Tight European balance and storage risks – Commerzbank
Commerzbank’s Norman Liebke stresses that European natural gas remains structurally tighter than Oil as Qatar LNG is cut off and US cargoes are redirected to Asia.
Commerzbank's Norman Liebke highlights the structural shortage of European natural gas compared to oil, caused by Qatar LNG cuts, US cargoes redirected to Asia, low storage levels, EU bans on Russian LNG and pipeline gas, and El Niño-driven Asian demand. European gas market conditions are more strained than oil, as evidenced by falling prices since June due to the US-Iran agreement.
US LNG exports intended for Europe have been redirected to Asia, worsening the issue during gas storage replenishment. Current gas storage levels are 17 percentage points below the five-year average and may only reach 70% by heating season start. The European Commission is increasingly dependent on LNG imports during winter, which poses price risks, especially with El Niño expected to increase Asian gas demand.
Additionally, the EU banned Russian LNG imports starting early 2024 and pipeline gas imports from Russia beginning in fall 2027. This ongoing divergence in oil and gas prices is likely to continue.
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