According to Bloomberg, Europe's winter heating season is reliant on weather conditions in Asia and gas supplies.
European countries are now shifting away from Russian energy. That is why they are striving to ensure that gas storage facilities are sufficiently filled. At the same time, their ability to stay warm in the coming winter heavily depends on Asian countries.
Analysts expect a spike in demand for energy in a number of Asian countries, in particular in China, South Korea, and Japan. Notably, these nations are among the world's biggest importers of liquefied natural gas and coal. European countries will also see demand picking up, Bloomberg says.
Experts reckon that heating in Europe will depend on the weather in Asia. At the moment, it is difficult to make accurate forecasts for winter weather patterns, but any drop in temperature will provoke intense competition for fuel. "A colder-than-normal winter could spike prices if Russian supplies to Europe stay low," Bloomberg warned.
At the moment, the bloc's member countries are stepping up their efforts to prepare for winter, cutting gas consumption and boosting LNG imports necessary to fill storage tanks. According to experts, additional purchases from European nations have caused a surge in LNG and coal spot prices. At the same time, developing countries such as Bangladesh and Pakistan are already facing daily electricity blackouts amid the diminished purchasing power of their households. Experts fear that competition for energy resources could get even more fierce in winter.
Once cold weather sets in, Japan and South Korea will probably battle with Europe for fuel. “Should there be a very cold winter, Japan and South Korea will likely need additional spot cargoes, in which case they can probably compete with European buyers,” IHS Markit currency strategists noted. However, China will find itself in a more comfortable position thanks to record coal production. Besides, subdued energy demand recorded in 2022 has left its inventories at high levels.
Earlier, High Representative of the European Union for Foreign Affairs and Security Policy Josep Borrell said that Europe was bracing for a hard winter and an economic downturn. “Europe is facing a perfect storm: energy prices are up, economic growth is down and winter is coming,” the official noted. In winter, Europeans will have to reduce energy use, the bloc's top diplomat added.