European gas prices stabilized at their lowest level in nearly 22 months, as traders weighed signs of oversupply against forecasts that a hot summer could boost demand for the fuel. This comes on the heels of Europe being relatively slow to start rebuilding gas supplies, but supplies were largely rebuilt after dangerously sagging last winter that underground storages could be filled on average 75 to 80% by the end of summer, putting downward pressure on prices.

Gas prices have been trending downward since mid-December 2022, after peaking at €339 per MW*h in August, due to the above-forecast LNG supplies, as well as lower consumption, and rather mild weather. European Union’s industries and households reduced their natural gas consumption by 13.2% in 2022. Meanwhile, record LNG shipments from the U.S. and increased supplies from Norway, Algeria, and Qatar have substantially compensated for the missing Russian pipeline deliveries. Although the worst of the energy crisis is over for now, risks remain for next winter, such as a hot summer that could reduce hydro levels, a cold winter, and a rebound in Asian LNG demand.

Meanwhile, scientists at the Copernicus Climate Change Service see a more than 60% chance that temperatures in Spain, France and Italy will be well above average between June and August. That could mean more fuel is needed to run air conditioners, just as energy companies try to replenish natural gas supplies ahead of winter.

According to Gas Infrastructure Europe (“Composite Gas Storage Inventories”, May 11), EU and UK inventories increased by +73 TWh between March 31 and May 9. The rate of accumulation was far below the +119 TerraWatt*h (TWh) added last year, when the region was bracing to fill storage geopolitical instability in Eastern Europe, and below the prior 10-year seasonal average of +81 TWh.

But the record carry-over from winter 2022/23 resulted in the stocks to be able to reach 707 TWh on May 9, according to Reuters, representing the second-highest on record for the time of year and +274 TWh (+63% or +1.99 standard deviations) above the 10-year average.