An influx of LNG once again has Europe on track to fill its storage inventories ahead of the winter heating season.
A surge in liquefied natural gas imports has offset the loss of Russian pipeline deliveries to Europe since mid-2022, and has helped to keep storage inventories elevated. The continent remains the largest importer of U.S. LNG for the third year in a row.
Storage facilities across Europe are 71% full, compared to the five-year average of about 59%. Inventories are expected to continue climbing at comfortable levels and are forecast to hit the mid-90% range by the end of October, Goldman Sachs Commodities Research said in a recent note to clients.
For the time being, “a lot of LNG is being drawn away from Europe this quarter as a result of strong Asian LNG demand, amid limited global supply growth,” EnergyAspects’ James Waddell told NGI.
Lower prices, along with a heat wave in South Asia, are driving demand in the region.
The firm expects European LNG receipts to remain subdued this quarter, which is limiting the stockbuild. “But Europe is still sitting on record high inventories for this point in the injection cycle and the continent should comfortably be able to get close to the high end-October fills of the last couple of years,” Waddell added.
Europe received nearly 60%, or 220.1 Bcf, of the total 370 Bcf of U.S. LNG exported last year, according to the U.S. Department of Energy (DOE), helping drive growth in annual exports compared to 2022.
France, Netherlands and Spain received more than 60% of total March U.S. exports to Europe, according to the DOE’s monthly report. U.S. export facilities delivered 60.6 Bcf of LNG to France, 57.2 Bcf to the Netherlands, 28.9 Bcf to Japan, 21.8 Bcf to Spain and 21 Bcf to South Korea.
The United States delivered 43 LNG cargoes to the Netherlands in the first quarter of the year, a 6% increase compared to the same period last year. France received 42 cargoes of the super-chilled fuel from the United States in the first quarter, a 35% jump compared to the same period last year.
European natural gas prices have been trading near $11/MMBtu, a level that remains above historical averages. The market is still sensitive to supply disruptions, while competition with Asia will continue to present a challenge during the restocking season.
That was evident Monday (June 3) when the Dutch Title Transfer Facility surged by 13% to a six month high of over $12 after an unexpected Norwegian production outage jolted the market. The outage has since been repaired and prices have declined.
On the other hand, strong renewable power generation and an ongoing decline in industrial natural gas demand could ultimately keep prices at bay.
