Quarterly Gas Review – Issue 13
After a supply-long 2019 and COVID-impacted 2020, the first quarter of 2021 saw European gas demand surge due to a sharp spell of cold weather. As similarly cold conditions in NE Asia drew away LNG cargoes, European storage stocks were rapidly drawn down to balance the global market. This depleted the substantial stocks that had accumulated over the past two mild winters. Looking forward, the TTF forward curve, and the Asian prices as well, may well be incorporating a “fear” premium based on the events of the winter just gone when Asian buyers were caught by the very cold weather. In the absence of sufficiently strong Asian LNG demand in 2021 and/or a failure of European pipeline imports to materialise, it seems rather more likely that prices during the summer will fall below those of the forward curve. This would prompt both greater injections into European storage and the stimulation of greater LNG imports into the most price-sensitive markets, which could reduce the likelihood of LNG shut-ins this summer
