LONDON, Nov 18 (Reuters) by John Kemp – Europe’s gas storage probably peaked this week ahead of the winter after a refill season that shattered records for its length and the volume of gas injected into storage sites across the region.
Inventories in the European Union and the United Kingdom reached 1,079 terawatt-hours (TWh) on Nov. 13, according to Gas Infrastructure Europe (“Aggregated gas storage inventory”, GIE, Nov. 18).
They have since fallen slightly as cold weather and lower prices encourage more consumption, in what probably marks the end of the summer refill season and the start of the winter drawdown.
But the refill season has already been the longest and largest on record as European countries have maximised the volume of gas injected into storage sites to protect themselves from any interruption in pipeline supplies from Russia this winter:
- Refilling began earlier than usual on March 19, the second earliest date since 2011, and 11 days earlier than the median for 2011-2021.
- Refilling ended (provisionally) far later than normal on November 13, the latest date on record, and 18 days later than the median.
- Refilling lasted a record 239 days compared with a median of just 208 days, equivalent to an entire extra month of storage.
- Inventories increased by a record +788 TWh, comfortably surpassing the previous high of +765 TWh, and a median increase of +594 TWh.
- Record filling ensured inventories peaked +167 TWh (+18% or +1.60 standard deviations) above the prior ten-year seasonal average.
- Record stock building erased a seasonal deficit of -129 TWh (-23% or -1.37 standard deviations) at the end of January.
The refill season’s early start, late finish and record injection have put European countries in the strongest possible position ahead of the winter heating season and any reduction in supplies from Russia.
By continuing so late into November, it has also shortened the subsequent winter drawdown and helped make scarce stocks last longer, reducing the risk they will fall critically low before winter ends.
Chartbook: European gas inventories
European inventories have been boosted by record high prices, government storage mandates, reduced consumption by households and industries, and unusually mild temperatures through October and early November.
But the record refill has been extraordinarily expensive: front-month gas futures prices surged to almost €340 per megawatt-hour in late August, up from €45 a year earlier, though they have since retreated to around €110.
Prices would have spiked even higher if China’s own sluggish economy and rising domestic gas production had not caused it to reduce its own purchases of LNG leaving more for European buyers.
The record European refill has come at the expense of consumers and businesses in lower-middle income countries, especially in South Asia, unable to compete with Europe to pay such high prices.
As a result, Europe’s record refill and plentiful inventories have left consumers in countries such as Pakistan and Bangladesh at risk of gas shortages, rationing and power cuts this winter.
John Kemp is a Reuters market analyst. The views expressed are his own
(c) Thompson Reuters