14 February 2019
- Supply conditions have improved relative to last week. The E/NW spread (Russian imports vs. NW Europe) is marginally down, which is a sign of greater supply in the West. Storage discharging rates have also fallen in the past 5 to 7 days in response to lower demand. As a result, oversupply remains in place and continues to signal record levels (past 5 years). This is also thanks to LNG volumes that remain high despite a relative decrease in imports over the past four weeks.
- Looking forward, Europe is predicted to be significantly warmer than average. Western Europe in particular could see spring-like temperatures for the next couple of weeks, hampering continental demand. High pressure will be centred over central Europe, leading to a general tightness in wind output. However, part of this deficit will be balanced by solar power production.
- Macroeconomic conditions continue to disappoint despite some weak signs of recovery. The latest PMI data is now <50, more than 10 points down relative to 12 months ago. Industrial production (Q4) supports the above with a significant slowdown in manufacturing activity. However business expectations are pointing to a better outlook, which will have to be supported by stronger evidence as time goes by.