21 August 2019
- Gas volumes from Russia are predicted to slow down, with supply in western Europe roughly unchanged relative to the previous week. Total supply (pipeline & LNG) is marginally above the long-term average. The long period of oversupply that has characterized the European gas market is now over. LNG volumes for the next two weeks could potentially increase after they recorded the lowest value since the beginning of the year (i.e. below the 10k GWh/week). Injection rates have continued to be below average. This will likely continue until the end of the re-stocking phase.
- Demand is expected to improve during the next 5 to 10 days. Temperatures will gradually increase over Europe, likely leading to the third heat wave of the summer season. Anti-cyclonic conditions will also curb renewable production (excluding PV), hence supporting demand for gas. The climate spread is predicted to increase, eroding the gas margin (relative to thermal coal).
- The short-term macroeconomic environment remains weak. The PMI, albeit showing large country-to-country variability, is still trending downward and is now below 50 for all countries considered. Our BE index provides some evidence for a potential recovery (second half of Q3). The future updates of the industrial production index will tell whether this projection verifies. The EI index remains stable and is predicted to slightly increase, providing support for an improvement in short-term demand.