European gas: Low storage keeps a floor under prices into winter - ING

ING’s Warren Patterson says European gas prices have climbed above EUR70/MWh as lower Persian Gulf LNG supply and strong Asian spot buying cut EU LNG imports by about 16% year-on-year between April and July. EU storage was around 65% full at the end of August versus an 82% five-year average, with inventories projected at 72–73% at the start of the heating season, potentially prompting faster purchases and limiting downside for prices into winter.

Low storage supports gas prices

"European gas prices have recently exceeded EUR70/MWh, their highest since March. Lower Persian Gulf LNG supply has tightened the global market, while strong Asian spot buying pushed EU LNG imports down about 16% year-on-year between April and July. We believe imports should stabilise and recover on a month-on-month basis because freight economics now favour sending spot cargoes to Europe."

"Slower injections left EU storage around 65% full at the end of August, versus a five-year average of 82% and below 2021 levels. Our balance points to inventories of 72-73% at the start of the heating season, well below the headline 90% target and potentially below the flexible 75% threshold."

"Some member states may therefore need to accelerate purchases, supporting prices as winter approaches. Low storage limits the downside for European gas prices under any of our Persian Gulf scenarios."