LNG Market Outlook Featured Article

August 2021

European storage remains low, forecast lowered for 2H 2021

The past month has not seen European natural gas storage recover to more normal levels with total storage levels remaining below the five-year range and well below last year’s level. Granted, storage levels for 2019 and 2020 were extremely high, but the market cleared almost all of that excess inventory in one winter, so if the weather is cold this winter, the European market may be headed for trouble. Prices are extremely high for this time of year and even higher than they have been the past two winters.

The forward curve indicates the mood for the coming months is similar with little price or perhaps volume relief coming. It is getting late in the season for storage levels to pop up too much, especially given the low volume of LNG and pipeline gas currently headed into the region.

The middle graph compares the volume of LNG arriving in select regional countries in August 2021 to the arrivals in August 2020. Note that the August 2021 values are estimated based on MTD numbers through the 25th. LNG imports into every country except Italy and Belgium are lower this year compared to last year.

Looking back at the top graph, in August last year, the storage build was very slow as there was little need to add additional volume into storage given the high levels throughout the summer months. Volumes coming into the region were quite low as US cancellations continued. This year, even though storage levels are lower, the volume coming in remains very low.

 After discussing the outlook for the remainder of the year with market participants, most seem to believe that import levels will not pick up for the remainder of the summer and the autumn. The forecast has been adjusted downward accordingly (bottom graph).

Starting in January and throughout the winter, the forecast is relatively unchanged, as the additional LNG volumes will be needed to make up for low storage. In 2022, the forecast has been lowered somewhat with additional volumes headed to Asia, especially China where the demand forecast has increased substantially.

European natural gas storage

Europe August import comparison (2021 estimated)

Europe LNG import forecast comparison

 

Subscribe to Poten’s LNG Market Outlook


Industry participants rely on Poten’s LNG Market Outlook to identify and capture market opportunities in the increasingly complex LNG market. To activate your subscription or learn more, connect with us today: bi-info@poten.com

Get to Know Poten’s LNG Business Intelligence Services

Actionable short term market intelligence

  • Monthly country-level forecasts
  • Global arbitrage analysis
  • Detailed data on future trade flows

Learn More

Analysis of LNG finance across the value chain

  • Annual ranking of LNG lenders
  • Detailed analysis of project lending
  • Intelligence on project finance structure
  • Insight on lending to the shipping sector

Learn More

A 10-year price, supply and demand forecast

  • 10-year projections
  • Bottom-up demand forecasts
  • LNG imports and exports
  • Special focus on shipping

Learn More

Insight on LNG markets, projects and the industry

  • Commercial and technical details of global projects across the value chain
  • Detailed coverage of spot markets with data and analysis on market fundamentals, price levels and trade flows
  • Shipping activity and technology developments

Learn More

Visit Us On TwitterVisit Us On Linkedin