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Chart of the Day: EU Gas Storage Remains at Record High, But ….
Summary
Gas storage in the EU remained at historic highs at 62.3%, or 2.5 percentage points higher year-on-year and 21 percentage points higher than the past three-year average, as shown in Figure (1) above. The chart shows how storage has been increasing since EU members became worried about the decline in Russian gas supplies.
EOA’s Main Takeaway
The irony here is that EU members want to keep storage high because of the “Russian gas,” but Russian gas contributed to the storage build. About 18% of the EU’s total gas imports came from Russia last April (both piped gas and LNG). The other irony is that gas prices increased in Europe despite the high storage levels! In April, the European benchmark for gas TTF was up 5.7%, reaching $9.1 per MMBtu by the end of the month.
LNG demand in the EU last month rose for the first time since December 2023 to compensate for lost piped natural gas supplies from Norway. Concerns over the Gaza war, and other events such as maintenance work at Norwegian gas fields, added an upward pressure on TTF that ended the month at $9.1 per MMBtu, up from $ 8.6 per MMBtu on April 1, as shown in Figure (6) below. Meanwhile, the JKM (Japan Korea marker) benchmark took a similar trajectory and increased by 8.7% to $ 10.3 per MMBtu amid signs of strong demand. However, healthy gas stockpiles in the EU, that remained stable at 62.3% by the end of April, limited further price gains.
TTF prices could see additional gains only if market fundamentals change in the months ahead. We are mainly referring to Norway’s extensive maintenance program in summer, and the reduction in US shale gas production in response to a low-gas price environment. With respect to a possible EU ban on Russian LNG, we believe that such a measure is not feasible in the short term, given that Russian gas meets nearly 20% of the EU’s total LNG needs.
Story of the Day
Reuters: OPEC Switches to 'Call on OPEC+' in Global Oil Demand Outlook, Sources Say
Summary
OPEC will no longer report global demand for its own crude in monthly reports, instead focusing on the broader OPEC+ group's forecasts. This shift reflects the collaborative efforts of OPEC members and non-OPEC producers under the Declaration of Cooperation (DoC). OPEC's traditional "call on OPEC" estimate will be replaced by DoC forecasts to better capture market dynamics, as OPEC+ now holds a 41% market share.
EOA’s Main Takeaway
Long awaited change to give more credibility to the move from OPEC to OPEC+. However, the whole concept of the “Call on OPEC” or “Call on OPEC+” is flawed.