Europe tries to replenish natural gas supplies after harsh winter
Benchmark British wholesale gas prices will stay elevated for the rest of 2018, as operators across Europe race to replenish inventories that have plunged to their lowest in at least five years.This should create an opportunity for US LNG sales to Europe to deal with the shortage. Europe's fracking phobia is another reason for the shortage.
Prices soared to record highs in March as freezing temperatures lifted gas demand to its highest level since 2010, drawing down stocks across Europe and exacerbating tightness from outages and reduced liquefied natural gas (LNG) imports.
Britain, whose gas prices are a benchmark for other European hubs, relies on reserves to manage its winter demand. It will need to refill at record pace this summer, at a time when European nations are also chasing extra supplies.
Northwest European gas storage volumes are expected to start the summer season at about 6 billion cubic meters (bcm), the lowest level since at least 2013, when Thomson Reuters Eikon data for European inventories began and stocks stood at 10 bcm.
“That does not mean that gas prices will spike but it’s unlikely that gas prices will drop - at least for the very beginning of the spring/summer season,” said Giacomo Masato, research analyst at brokerage Marex Spectron.