Winter is Coming, Storage is Down: IEA

The International Energy Agency has published a commentary looking at how storage inventories fell to a four-year low level in the US by the end of last winter and to record lows in Europe.

"This situation prompted strong injections to replenish underground storages, and contributed to sustained levels of imports in Europe and high prices throughout this summer. Still, despite these efforts, inventory levels as of the end of September were slightly lower than last year’s levels in Europe, and almost 20% lower in the United States," writes Jean-Baptiste Dubreuil, an IEA gas analyst.  This winter, as last, China is expected to continue to exert a major call on global LNG demand - but this winter, spot rates for LNG carriers have skyrocketed, he writes.

The prospects of a natural gas glut, heard two years ago, vanished following last winter’s tight market and are being replaced by concerns over security of supply, argues Dubreuil.

"The night is dark and full of terrors … or is it?" he writes, noting that if the coming winter happens to be a mild one, market prices are likely to remain stable or even decrease.

His commentary can be read here.