Europe is preparing for the winter season amid significantly reduced gas reserves and limited LNG supplies. Analysts warn that cold weather or further supply disruptions could deepen the shortage and drive prices higher.
Europe is approaching the winter season with one of its lowest gas inventory levels in recent years, increasing the risk of higher prices and shortages if weather conditions deteriorate. Last week, benchmark gas prices in the region approached a four-year high of €75 per megawatt-hour, while on Monday they remained at around €73.
As reported by China Daily, European gas storage facilities were approximately 66.6% full, compared with an average of around 80% for this time of year. Analysts at Wood Mackenzie believe that disruptions to global fuel supplies, combined with low inventories, are leaving the market with little room for error.
Additional pressure is coming from reduced LNG supplies: since the end of February, approximately one-fifth of global volumes has been effectively unavailable. This has significantly intensified competition between Europe and Asia for the remaining supplies.
Germany is of particular concern. According to industry group INES, its gas storage facilities were more than 53% full as of September 1 — the lowest level for the beginning of September in 15 years. By November 1, inventories may reach no more than 77%, which is considered sufficient for a normal winter, but the system would remain vulnerable to severe cold.
A predominantly mild winter could improve the situation. Severe weather conditions or further supply disruptions, however, would increase the risk of shortages and further price increases.
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