European gas storage at two-year low

Europe's gas storage facilities were at a two-year low for late March, holding 315 TWh or 28% full, down from about 620 TWh at the same point in 2020, according to data from the Gas Infrastructure Europe website, which includes non-EU states UK and Ukraine. The withdrawal season still has another month to run, with another northwest Europe cold spell looming at the start of April.

The 2020 injection season had been boosted by supplies of cheap gas in the summer as the Covid-19 pandemic saw gas demand plummet, and prices came down too for spot cargoes before the upstream LNG terminals reined in production. As a result the cheap gas went into storage, bringing inventories to very high levels before winter.

However the cold spells in January and February led to a steep gradient as suppliers met rising household demand for heating. Traders would also be keen to realise the profit from the summer-winter price difference.

Ukraine, whose capacity has been sold also to European gas suppliers in growing quantities, still held 117 TWh of gas March 29 and also the lowest level for two years at 36% full. For three years at least before that, they had held about 80 TWh- 95 TWh at that date, but had started off the withdrawal season with less in store as there was less third-party storage. 

Storage withdrawals have mostly been a function of cold weather, but wide summer-winter price differences create a trading opportunity, while salt cavern storage, which can be cycled faster, provide more opportunity to make money from volatility over short time periods. So companies are looking more at investing in storage of their own, such as Swiss trader MET.