EUROPE'S GAS STORAGE LEVEL: +48%

U.S. EIA - European natural gas storage levels are 48% higher than the five-year (2015–19) average for February, largely a result of unseasonably warm weather in recent months and higher-than-average imports in 2019. In January 2020, the average temperature in Europe was 0.36° Fahrenheit (F) higher than the previous record-high average, set in 2007, and 5.58°F higher than the 30-year average. Temperatures in north and northeast Europe, where demand for natural gas for space heating is highest, were approximately 10.8°F higher than the 30-year average in January 2020. As a result, demand for natural gas from storage was lower than normal, resulting in record-high January and February inventory levels. Working natural gas stocks at the start of February were at 71% of total storage capacity. The five-year average storage capacity utilization for the first day of February was 50%.

High natural gas stocks are partly the result of record-high deliveries to Europe of liquefied natural gas (LNG) in 2019. LNG exports to Europe from Australia, Russia, and the United States have been growing in recent years. Europe receives a large portion of U.S. LNG exports, with 10 European countries receiving some amount of U.S. LNG last year. From April through November 2019, 55% of U.S. LNG exports went to Europe, equal to 2,062 billion cubic feet (Bcf). In November 2019, the most recent month for which data is available, Europe received 58% of all U.S. LNG exports, and the United Kingdom alone received 40 Bcf of natural gas that month.

The capacity to deliver natural gas to Europe by pipeline has also expanded with new conduits, such as the Trans-Anatolian Pipeline from Azerbaijan. Additional sources of supply into the European market are moving ahead, which is further diversifying supply. In January 2020, a new pipeline called TurkStream entered service, delivering natural gas under the Black Sea directly to Turkey and Bulgaria. The Trans Adriatic Pipeline, which will connect supplies from Azerbaijan to southeast Europe, is currently undergoing commissioning and should be completed around the middle of 2020.

As a result of unseasonably low heating demand and growing supply, European natural gas prices are at relatively low levels. The spot price of natural gas at the UK benchmark National Balancing Point (NBP) averaged $3.66 per million British thermal unit (MMBtu) in January, an all-time low for the month. Similarly, the price of natural gas at the Title Transfer Facility (TTF) trading hub in the Netherlands averaged $3.62/MMBtu in January, also a record low for the month and less than half of the 2018 average price, which was $7.92/MMBtu.

Temperatures across Europe are forecast to remain higher-than-average through the end of the heating season.

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