Gas prices in Europe could fall because storage facilities are too full
Gas prices in Europe could fall to as low as $6.70 per million British thermal units (MMBtu), just over 21 euros per MW, this summer, thanks to a mild winter and ample gas supplies, he said Wood Mackenzie in a new relationship.
The report said gas markets started the current year on a more bullish note, as colder weather swept through Europe, while industrial demand maintained its recovery trend, rising 12% on annual basis in January and around 6% in February.
WoodMac predicted that domestic gas demand in Europe will increase by 12 billion cubic meters in 2024, under normal climate conditions, while industrial demand will grow by 5.5 bcm thanks to the recovery of the EU economy in the second half of the year . However, 9 bcm less gas will be allocated to power generation, implying that overall European demand is set to increase by 9 bcm. However, this will not be enough to support the increase in gas prices with storage levels at historic highs.
“With storage levels approaching full capacity in late summer, there will be up to 10 bcm of excess supply that will need to be piped to underground storage facilities in Ukraine or transported in LNG vessels. This means that to balance the market a higher summer-winter differential is needed than the current forward curve suggests, putting downward pressure on Q3 prices,” said Mauro Chavez, Director of European Gas and Gas Markets. Wood Mackenzie LNG.
With Europe's gas off-take season almost over, inventories stood at 70.78 billion cubic meters on March 10, an increase of 5.61 billion cubic meters year-on-year and 21.41 billion cubic meters above the five-year average, according to data from Gas Infrastructure Europe (GIE). Commodity analysts at Standard Chartered have predicted that the end-of-season inventory level will exceed 68 bcm.
This means that the mild winter and low industrial demand, linked to a lagging economic recovery, led to this increase in gas reserves. European TTF prices also fell to 22 euros per MW, but then rebounded and reached 29 euros, probably on hopes of an increase in industrial demand:
Gas prices in Europe remain depressed, with the previous month's Dutch Title Transfer Facility (TTF) falling by 1.955 euros per megawatt hour (MWh) to settle at 24.93 euros/MWh on March 11. This is 53% lower than the previous year and 81% lower than two years ago, immediately after Russia's invasion of Ukraine.
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The article Gas prices in Europe could fall because storage facilities are too full comes from Economic Scenarios .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/i-prezzi-del-gas-in-europa-potrebbero-scendere-perche-i-depositi-sono-troppo-pieni/ on Tue, 19 Mar 2024 08:00:22 +0000.