Favorable conditions last winter have placed Europe in an advantageous position of being able to fill, to full capacity, its natural gas storage facilities even if Russian supply is completely cut off.
Europe needs to store away approximately 35 billion cubic meters of natural gas between now and the end of October, well below the average figure of roughly 55 bcm over the past decade, in order to fill its energy storage facilities at 90 percent of capacity, the European goal set for next winter.
A year ago, Europe needed to purchase approximately 70 bcm of natural gas to fill its storage facilities. This was one of the factors that pushed prices up to all-time highs.
Fortune went Europe’s way last winter as temperatures remained mostly mild, significantly subduing energy usage, while China’s zero-Covid policy enabled the continent to import substantial LNG quantities which, otherwise, would not have been available.
As a result of these factors, Europe’s gas storage facilities were left 55 percent full by the end of last winter, well above the previous decade’s average of 33 percent.
Despite the favorable news for Europe, the market remains susceptible to dangers as a result of increased natural gas usage in the industrial sector and revitalized demand in Asia, factors that have led analysts to forecast a wholesale gas price rebound that could exceed 100 euros per MWh.
Also, the milder weather conditions could have negative impact in the long run. Low rainfall and snowfall in many parts of Europe could lead to a hot and dry summer, increasing energy demand for cooling purposes, and prices. This could make Europe’s energy-storage refilling effort slightly more challenging.