Column: Gas stocks in Europe end winter at a comfortable level: Kemp

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A general view of the WINGAS gas storage facility near the northern German town of Rehden January 7, 2009. REUTERS/Christian Charisius

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LONDON, April 5 (Reuters) – Gas stocks in Europe ended the winter a little below normal but much more comfortable than they looked three months ago thanks to mild weather and prices ultra-high which maximized imports and discouraged consumption.

Storage sites in the European Union and the United Kingdom (EU28) held around 294 terawatt hours (TWh) of gas as of April 1, according to preliminary estimates from Gas Infrastructure Europe.

Gas inventories were 61 TWh (17%), about 0.54 standard deviations below the previous 10-year average for the time of year (https://tmsnrt.rs/38uCc4m).

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But the situation has improved considerably since Christmas, when inventories were expected to fall to just 215 TWh by April 1, which would have been 142 TWh (40%) or 1.22 standard deviations below the average.

Temperatures have been warmer than normal, especially since the beginning of the year, which has curbed gas consumption and eased the pressure on inventories.

The cumulative number of heating degree days in Frankfurt, Germany was more than 11% lower than the long-term average.

Equally important, record futures prices in Europe have encouraged LNG suppliers to export there rather than Asia, while high prices have also discouraged consumption by power generators and industrial users.

As a result, stocks bottomed out after the winter on March 19, 11-12 days earlier than the decade-long median, and they are now rising slightly.

Total inventory depletion between last year’s post-summer high and this year’s post-winter low was 578 TWh, barely above the average for the past decade (561 TWh) and below to the average of the last five years (651 TWh).

Market attention has now turned to filling storage and building inventory ahead of next winter, but the rebuilding is starting from a reasonably comfortable base.

If inventories accumulate in line with the average of the last 10 years, they should reach 871 TWh at the beginning of October.

Inventories would then be at about the same level as last year, while remaining 61 TWh (7%) below the average for the last decade.

In practice, very high gas prices will continue to encourage maximum imports and discourage consumption, which risks refilling storage more quickly than usual.

Provided pipeline imports from Russia are not halted or sanctioned, and this is a key assumption, high prices should ensure that stocks are above average before next winter.

Related columns:

– Global energy markets look to next winter (Reuters, March 15) read more

– Europe braces for high gas prices to last until 2023 (Reuters, March 3) read more

– Warm Northern Hemisphere winter averts energy crisis – for now (Reuters, February 22) read more

– Gas storage in Europe more comfortable after mild January (Reuters, February 2) more

– Europe’s gas stocks get respite from hot weather (Reuters, January 6) read more

– European gas stocks run out fast in cold start to winter (Reuters, Dec 7) read more

John Kemp is a market analyst at Reuters. Opinions expressed are his own.

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Written by John Kemp; Editing by Susan Fenton

Our standards: The Thomson Reuters Trust Principles.

The opinions expressed are those of the author. They do not reflect the views of Reuters News, which is committed to integrity, independence and freedom from bias by principles of trust.

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