European storage withdrawals run on

The cold spell in April has further depleted gas in European storage facilities, even after injections had started briefly in early April – it was the Easter weekend in parts of Europe and relatively mild. Since then there have been snowfall, frosts and very little wind, factors that encourage gas demand for heating and power generation. Inventories are now at 323 TWh, down to below 29% across the continent and UK. 

There are however another 110 TWh in Ukraine, where many traders have booked capacity taking advantage of favourable customs tariffs.

On some days around mid-April, wind accounted for less than 5% of the UK power mix, while gas was at 55% and coal was also being burned, according to the UK Gridwatch website which monitors real-time generation. On April 12 for example, power demand accounted for 93mn m³, out of 326mn m³ estimated daily UK demand.

The pull has lifted summer gas prices as demand for reinjection has gone up; this has had the effect of narrowing the price difference with next winter and shrinking the arbitrage.

Major gas exporter Gazprom has taken advantage of the extended withdrawal season to advertise, saying April 19 that "less and less time is left to replenish such a considerable amount of gas" and warning that the summer injection period will be even tighter than normal.

According to its preliminary data, from January 1 to April 15, gas production amounted to 158.1bn m³, which is 12% more than the same period last year. Exports beyond the former Soviet Union amounted to 60.5bn m³, up 28.4% (13.4bn m³) more than within the first 3.5 months of 2020.

However Europe's second biggest exporter Norway has just entered the maintenance period, which will cut into deliveries progressively over the rest of the first half of the year at least.