EU natural gas storage has climbed above 40% but remains significantly below the five-year average, raising concerns about supply security as the continent heads into the critical refill season. ING analysts Warren Patterson and Ewa Manthey warn that stalled peace negotiations and ongoing LNG export disruptions from the Middle East are compounding supply risks ahead of next winter.
The storage deficit comes at a precarious time as European markets face multiple headwinds including geopolitical tensions affecting Russian pipeline flows and instability in key LNG producing regions. The combination of below-average inventories and potential supply chain disruptions could force gas prices higher in coming months, particularly if the summer refill period fails to close the gap with historical norms.
Market participants should monitor storage injection rates closely as summer progresses, with any shortfall likely to trigger increased price volatility and renewed pressure on European energy-intensive industries already struggling with elevated costs.
FXnCO Insight
Traders should prepare for heightened natural gas volatility and consider hedging strategies as Europe’s storage deficit amplifies downside supply risks into winter 2024-2025.
Source: FXStreet