7 October 2020
- The spot supply remains very tight (10% deficit on a multi-year average and almost -20% on a YoY basis). This is due to the significant drop in pipeline flow (both Russian and Norwegian side) in conjunction with weak LNG send-out. LNG volumes are expected to flatten out in the short-term but likely going to increase thereafter. The extent of such increase is still associated with a great uncertainty. 2019 saw a +190% increase in LNG send-out between week 41 and week 45, a figure that will hardly be replicated during the following weeks.
- High pressure conditions will amplify over northern Europe with a cut-off low centred over continental Europe and the Mediterranean. This will lead to a significant drop in surface temperatures over western Europe (sending HDDs well above the average of the period) in conjunction with an abrupt weakening of the wind output. The potential for gas-burning has been gradually eroded by coal in the past few weeks and 2020 now sits somewhat behind 2019 (currently between -2 and -3% YoY).
- The macro-economic indicators we monitor are sending contrasting signals. The fresh PMI data for September show a further increase (all countries of reference are now above 50 base points with Germany leading). However, the Business Expectation Index has been tumbling again, indicating the road to a full recovery is still far away. The Energy Intensity Index is predicted to raise over the next 5 to 10 days, supporting a positive short-term demand outlook.