17 September 2020
- The spot supply has trended even tighter since our last report (two weeks ago). The pipeline flow remains flat, between 20 and 30% lower than last year. On the other hand, LNG send-out has dropped further signalling a -20% on a WoW basis. This is the result of hurricane Laura which disrupted the flow from the US from the 23rd of August. The exports have now picked up again and are expected to impact the European side at some point between the end of September and beginning of October. The storage capacity is at 93%, a couple of points below the inventory levels in 2019 (week 38). There is now less than a month left to gain another 1.5/2.0 points before the destocking phase commences.
- High pressure conditions will continue to affect western Europe for the next 3 to 5 days. However, the jet-stream will start pushing during week 39 leading to a significant drop in surface temperatures and stronger winds. As a result, the gas/wind spread is predicted to fall during the second half of the forecast period, deteriorating the demand for gas. The recent month saw the fossil fuels profiles shifting gradually from gas to coal, with percentages of capacity utilization that are now more in line with those observed in 2019 (week 38).
- The macroeconomic view has not changed significantly since our last gas note (while awaiting the publication of the new September figures). The autumn season (and more specifically, Q4) remains a key step to verify how robust the potential recovery will be. It is at the moment very hard to make a meaningful prediction, which is part of the reason why the market is very undecided.