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Europe makes rapid start on refilling gas storage

Europe’s gas storage is filling faster than normal as exceptionally high prices discourage non-essential consumption and encourage maximum imports via pipeline and liquefied natural gas.

Gas inventories in the European Union and United Kingdom (EU28) had climbed to 380 terawatt-hours (TWh) by May 1, according to estimates compiled Gas Infrastructure Europe (GIE).

Stocks had risen from 299 TWh on April 1, generally considered the start of the summer refill season, and a post-winter low of just 291 TWh on March 19 (“Aggregated gas storage inventory”, GIE, May 4).

Temperatures across Northwest Europe have been close to the average for the time of year ensuring heating demand has been fairly normal in recent weeks.

But the exceptionally high price of gas has discouraged consumption by power generators and industrial users as well as maximising imports.

The result is storage sites started to refill earlier than normal this year and inventory additions have been running faster than usual.

Stocks began to increase on March 20, more than 10 days earlier than average, and since then have risen by 89 TWh compared with just 11 TWh in 2021 and a pre-pandemic five-year average of 64 TWh.

At the start of May, stocks were only 81 TWh or 18% below the pre-pandemic five-year average – or just 0.21 standard deviations below the ten-year seasonal average.

If inventory accumulation over the summer follows the same trajectory as the last ten years, stocks are expected to reach 904 TWh by Oct. 1.

The probable range is from 750 TWh to 1,058 TWh, but that is more comfortable than the forecast range of 706 TWh to 1,062 TWh at the start of April.

High prices and early and brisk refilling have reduced the probability inventories will start next winter at critically low levels.

Assuming stocks reach 904 TWh by the start of October, they would be only 79 TWh or 8% below the seasonal average for 2015-2019.

But if prices remain elevated throughout May into June, which seems likely, inventory accumulation will continue faster than normal, and stocks are likely to start next winter higher than average.

Sustained high prices will ensure Europe starts winter 2022/23 with more comfortable inventories than in 2021/22 – enough to cushion the region from all shocks except the halt of Russian gas supplies.
Source: Reuters (Editing by Barbara Lewis)

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