TELF AG analyzes the dynamics of the global gas market
Continuous fluctuations
Warmer-than-normal atmospheric temperatures and continuous fluctuations in demand in the coming months could have a great influence on the European gas market, which could find itself in a position to deal with sudden increases and equally unexpected decreases. The worst phase of the energy crisis, however, now seems to belong to the past. On this point, more or less unanimously, observers almost all agree, also because in recent weeks, their attention has been focused on another set of factors, which within the next few months (and by the end of 2024) could lead to important changes in the energy status quo on European soil.
The first factor to take into consideration at this stage has to do with the uncertainty of demand, which in the short and medium term will have a decisive influence on gas prices. This is also partly linked to the issue of inventories, which in Europe are rapidly approaching their historical record. Compared to a year ago, however, the situation seems very different. During last summer, European gas prices increased very modestly compared to what happened last year, in the same period, and overall demand was below expectations. This has not only allowed Europe to alleviate its fears regarding energy supplies but has also led to a substantial enrichment of gas supplies in most European states, with all that this entails for the physical markets. Considering some specific factors – such as the various problems that have affected supplies in different corners of the world, from Norway to Australia -the overall increase in stocks is certainly a significant fact.
At the end of September, European gas stocks were far higher than the average recorded over the last five years, and according to what emerges from data from Gas Infrastructure Europe (GIE), the quantity of gas stored by European states is significantly approaching the quantity of gas that was stored in 2019, when the storage facilities were approximately 95% full (now we are at a slightly lower percentage). For Europe, which is preparing to enter (with considerable delay) the coldest season of the year, being able to count on a similar quantity of reserves undoubtedly represents a reassuring element.
The increase in European stocks is certainly linked to many factors, among which the notable drop in consumption certainly stands out: this year, in fact, in Europe, the demand for gas has decreased by approximately 15% compared to the last five years, also due to the thermal anomalies which have indefinitely prolonged the summer season. According to the forecasts of the majority of analysts, the situation could remain unchanged for several more months: European gas demand could in fact generally remain limited, while domestic consumption could continue to remain far below average until the middle of next year, also thanks to the weakening of industrial production and the growing contribution of energy optimization. A possible price increase could also be related to the peculiar dynamics of the LNG market, and in particular to the increase in exports of this gas to some specific countries.
