Europe's Gas Storage Faces Slowdown Amidst Seasonal Shifts

Europe's gas storage is filling more slowly this summer compared to previous years, reducing the likelihood that inventories will run out before winter heating demands kick in. Current stocks stand at 908 terawatt-hours, with the pace of filling lagging behind last year's figures and the ten-year average.

Europe’s gas storage is filling more slowly than normal this summer, reducing the likelihood that space will run out before the winter heating season begins. Data from Gas Infrastructure Europe (GIE) shows inventories across the EU and the UK stood at 908 terawatt-hours (TWh) on July 8.

Since winter ended on March 31, stocks have climbed by 238 TWh, slower than the 272 TWh recorded during the same period last year and below the ten-year seasonal average of 314 TWh. As a result, while inventories were 200 TWh (+28%) above the ten-year average, the surplus has narrowed from 277 TWh on March 31.

As of July 8, storage was just under 80% full, above the ten-year average of 64%, yet in line with 2023 figures and below the 2020 pandemic record. With the storage season nearing its mid-point, stocks have been increasing for 99 days so far, compared to the usual season duration of 209 days.

Projections suggest storage will reach 1,204 TWh before winter depletion begins in late October or early November. However, the projected peak has decreased from 1,280 TWh on March 31, indicating significant adjustments. To avoid exceeding the system's capacity of around 1,145 TWh, storage additions need to remain slower than usual. Generally, storage peaks around October 27, influenced by autumn temperatures and gas prices.

This year's futures contracts for October and November show a consistent contango, highlighting the need to slow additions and defer LNG imports until November. Historically, since 2011, pre-winter inventories have peaked as early as October 9 or as late as November 13.

John Kemp, a Reuters market analyst, shared his insights, highlighting how Europe’s gas surplus is narrowing as LNG gets redirected to Asia, and emphasizing the need for strategic import deferrals.