Gas Tightens Amid Geopolitical Risks and Low Storage

Key Moments

European Gas Prices React to Middle East Tensions

ING analysts Warren Patterson and Ewa Manthey report that European natural gas benchmarks have moved higher as geopolitical tensions in the Middle East increased concerns over global LNG trade.

They note that:

“European natural gas prices rallied further yesterday amid the growing tension in the Middle East.”

The analysts emphasize the vulnerability of LNG flows in the current environment:

“Escalation in the Middle East would leave a sizeable amount of global LNG trade at risk, and at a time when the EU holds lower than usual gas inventories.”

EU Storage Levels Lag Historical Norms

According to the analysts, gas inventories in the European Union are significantly below typical levels for this point in the storage cycle.

“EU gas storage is less than 32% full at the moment, well below the five-year average of 49% full.”

US Natural Gas Inventories: Smaller Draw, Still Below Average

For the United States, Patterson and Manthey highlight recent storage data showing a notable weekly withdrawal that nevertheless came in slightly below expectations.

“For US natural gas, inventories fell by 144bcf over the week, slightly less than the 149bcf the market was expecting.”

The resulting storage position remains tighter than both last year and the five-year norm:

“This leaves total US natural gas storage at 2.07tcf, which is 2.8% below year-ago levels and also 5.6% below the five-year average.”

Analyst Attribution

The observations on European and US natural gas markets are attributed to ING analysts Warren Patterson and Ewa Manthey. The article notes that it was created with the assistance of an Artificial Intelligence tool and reviewed by an editor.