Our market view - week 25
The need for European gas storage injections remains a central aspect of price formation, and markets are sensitive to changes in supply. Prolonged Norwegian maintenance pushed market prices higher last week. Gassco announced that technical work restricting Norway’s output by 54 mcm/d will now last until 31 July, a 19-day extension from the original announcement. The implication of the extension is that the storage injection period could now extend into the winter, supporting winter prices.
The continued decrease across European power sector demand will allow higher gas storage injections over the summer, but LNG and pipeline supply lag what will be necessary to build stocks to levels associated with lowering price risk this winter.
British gas storage levels are currently at 40% of capacity, compared with 66% at the same point last year. France’s grid operator states that France as a whole is at risk of a gas supply shortage for the winter due to low levels of storage and lagging pipeline and LNG imports.