As winter sets in, Europeans are massively drawing on their gas stocks, a phenomenon accentuated by a complex geopolitical context which makes supply more uncertain. A near-term price rise seems increasingly likely.
Declining reserves, a situation under surveillance
For seven years, Europe has been consuming its gas reserves at a sustained rate. These underground stocks play a vital role in cushioning fluctuations in supply and demand. Currently, they are filled to 70% of their capacity, compared to 86% at the same time last year. This significant drop raises questions as winter begins and demand for heating intensifies.
Even if the immediate risk of shortage seems to have passed, the war in Ukraine has profoundly disrupted the gas market in Europe. According to Samantha Dart, head of natural gas research at Goldman Sachsthe weaker the reserves are at the end of March, the more complicated their reconstitution before next winter will be.
A more severe winter than last year is expected, particularly in north-west Europe, which leaves little chance of a significant reduction in consumption. If stocks continue to fall rapidly, pressure on prices could increase in the months to come.
First signs of price tension
The upward trend is already visible. Last week, the price of gas increased by 4%, reaching a level not seen in 14 months. This outbreak had a direct impact on certain companies in the sector, such as GTTwhich saw its price progress at the start of the year. In the longer term, this increase could also be reflected in the energy bills of European households in 2025 and 2026.
With supply under pressure and demand remaining strong, the gas market appears to be on an upward trajectory. The ability of European states to renegotiate their supplies could be decisive in avoiding an explosion in gas costs.
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