The European Union is on track to fill up its natural gas storage facilities ahead of schedule, Rystad Energy has forecast.
“Considering historical demand, and assuming different supply scenarios, storage facilities could even be full ahead of winter this year, resulting in gas flows having to be diverted elsewhere,” senior analyst Lu Ming Pang said, as quoted by The National.
The EU began filling its gas storage earlier this year but lately the additions have slowed down, Reuters’ John Kemp reported earlier this month, as low prices stimulate higher demand from industrial consumers.
Kemp noted that the levels of gas in storage at the beginning of June were 48% higher than the ten-year average for that time of the year, after storage levels reached two-thirds of capacity in late May.
There was more gas in storage to begin with, however, due to last year’s mild winter and significantly lower gas demand because of excessive prices.
According to Rystad Energy, as of June 25, European gas storage was 76% full, compared to 56% a year earlier. The European Union targets a 90% fill level by November 1.
Prices, meanwhile, have been on the rise for most of this month, mostly because of production outages in Norway due to field maintenance. So far this month, gas prices in the EU have added 38%, The National noted.
This week, benchmark prices rose further, hitting $3575 per megawatt-hour as weather forecasts suggest that most of northwest Europe, the biggest consumers of gas, will see a hotter-than-usual start to the summer, to continue at least until the middle of July.
Overall demand for gas in Europe, however, remains subdued compared to the five-year average as economies slow down and industries haven’t switched to gas despite the much lower prices compared to the records seen last summer.
“The heat wave will increase electricity consumption this week, but Europe’s power demand remains subdued in 2023, despite lower prices,” BloombergNEF analysts wrote in a note earlier this week.
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By Irina Slav for Oilprice.com
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