Europe Faces 17-Year-Low Gas Storage and Tight Supply Before Heating Season
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European gas inventories are at a 17-year low less than three months before the heating season, with supply available for purchase tighter than in 2022. Buyers must purchase gas now or risk winter shortages, as Qatari volumes have largely disappeared and EU sanctions on Russian LNG begin in January. New US LNG export capacity expected over the next year or two will arrive too late to ease this winter’s pressure.
Key Facts
- European gas inventories are at their lowest level in 17 years, and supply available for purchase is tighter than it was in 2022.
- EU sanctions banning all purchases of Russian liquefied gas take effect from January, after EU purchases of Russian LNG reached an all-time high this year.
- Belgium sourced all of its gas from Russia last month even though it hosts the EU's executive and legislative institutions.
- Europe ended the previous winter with gas in inventory much lower than the five-year average.
- Summer gas demand in Europe was higher than usual because of heatwaves across Western Europe, while summer is normally a trough demand season.
Gas Storage Deficit
European gas inventories sit at a 17-year low less than three months before the heating season begins in much of Europe. Supply available for purchase is tighter than it was in 2022. Europe needs to start buying gas now or risk shortages once heating demand rises. Qatari liquefied natural gas, a previous source for European buyers, has mostly disappeared and no one knows when it will return. Gas trading companies in Europe are in wait-and-see mode, cautious about spending too much on gas that may trade lower.
Sanctions and LNG Redirection
European gas buyers have leaned heavily on U.S. liquefied natural gas since the sanctions barrage against Russia, with Germany among the biggest clients switched. EU purchases of Russian LNG hit an all-time high this year before the bloc's latest gas sanctions take effect in January. Those sanctions ban all purchases of Russian liquefied gas from January next year. Belgium, which hosts the EU's executive and legislative bodies, sourced all of its gas from Russia last month. Europeans are competing with Asian gas buyers for a limited volume of LNG.
Winter Supply Risks
Europe ended the last winter season with much lower remaining gas in inventory than the five-year average. Summer demand was higher than usual because of higher seasonal temperatures, including a series of heatwaves across Western Europe. Europe lucked out with mild winters in 2022 and 2023 but then got a reminder that winter is normally cold and drives high gas consumption. Traders face a greater risk that gas prices will move even higher as winter draws nearer and the urgency of refilling storage caverns grows. New U.S. LNG export capacity expected over the next year or two will not arrive soon enough for Europe's current needs.
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Europe Faces 17-Year-Low Gas Storage and Tight Supply Before Heating Season
