EU launches gas withdrawal season
The eurozone reported on the amount of reserves at the beginning of the winter season with a new minimum level of 77.13% of the volume of UGS facilities. This amount of gas reserves could be enough to provide heating during the whole winter period. However, such a low volume of UGS facilities is likely to reduce the daily productivity and the ability to respond flexibly to severe cold.
Insufficient gas reserves in storages is the main driver of gas prices. The situation is also aggravated by a surge in fuel prices in Asia. Thus, at the Dutch TTF hub, gas for Monday delivery costs $1,081 for one thousand cubic meters.
In Europe, gas extraction from underground storage facilities took place from October 13 to October 15. On weekends, demand usually drops. That is why on October 16, the injection exceeded the withdrawal.
Last year, the transition from injection to withdrawal in Europe took place on almost the same date, on October 12. This year, the weather conditions were almost the same as in 2020. Thus, this October, the average temperature is just half a degree lower than in the same period of the previous year.
However, last year, gas reserves reached a record high. It was even profitable for the market to start selling off gas earlier than needed. Today, the situation is completely different. Gas reserves have declined to the all-time low. That is why pumping into the European UGS facilities could have lasted longer to build up as much gas as possible.
Not so long ago, the transition from injection to withdrawal took place approximately on October 20. Interestingly, in 2013, this happened even later, on November 3.
Meanwhile, Gazprom continues pumping gas in its storage facilities in Austria and Germany. Thus, Austria’s Haidach is 20% full, whereas Germany’s Jemgum is 82% full. However, German UGS Katharina is on pause, but it is 43.4% full. In the Netherlands, both injection and withdrawal processes halted in such storage facilities as Rehden (9.45% full) and Bergermeer (27.30% full) .
Notably, Gazprom also uses virtual storages, which was organized with the help of commercial interaction of European counterparties. However, the information is kept secret.
At the beginning of October 2021, the inflow of liquefied natural gas (LNG) to European terminals increased by 4% compared to the last year.