European gas: Low storage keeps a floor under prices into winter - ING
ING’s Warren Patterson says European gas prices have climbed above EUR70/MWh as lower Persian Gulf LNG supply and strong Asian spot buying cut EU LNG imports by about 16% year-on-year between April and July.
European gas prices have surged above EUR70 per MWh due to reduced Persian Gulf LNG supply and heightened Asian spot purchasing, which has cut EU LNG imports by around 16% year-on-year between April and July. EU storage levels were approximately 65% full by the end of August, compared to the 82% average over the past five years, with projections of 72-73% at the start of the heating season.
This low storage could lead to faster purchases, potentially limiting price declines into winter. European gas prices have reached their highest point since March. Freight economics now favor sending spot cargoes to Europe, with imports expected to stabilize and recover on a month-over-month basis. Slower injections left EU storage around 65% full at the end of August, compared to the five-year average of 82% and below 2021 levels.
Some member states may need to expedite purchases to support prices as winter approaches, as low storage limits the downside for European gas prices under various Persian Gulf scenarios.
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