Europe is entering its third winter in a row with underground stores brimming, while global LNG production capacity keeps rising. Like last winter, a weak economy could keep demand in check across Europe and Asia. Yet global gas and LNG prices are higher than they were a year earlier, and LNG is again more expensive than oil in Asia. With Russian gas transit through Ukraine more likely than not to halt at the end of this year, Europe and the global LNG market may yet face a tough test of their resilience in winter 2024-25. Cold, still weather combined with some unplanned supply outages could easily tip the balance and require a substantial underground stockdraw, setting the world up for a challenging summer 2025 restocking campaign.
Takeaways:
- A weak macroeconomic environment, more renewables and energy efficiency gains could well weigh on gas consumption. But a cold, still winter would change the picture dramatically
- A mid-winter halt to Russian gas flows through Ukraine would require central and eastern Europe to rely more on underground storage, while drawing gas in from the west
- Strong Algerian and Norwegian production and high underground inventories, coupled with additional LNG import capacity, should ensure the continent's supply
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