The last wave of cold received Europe also running out of stock natural gas in its reservoirs remain above normal levels. Thus fixing them energy supply this winter, the Old Continent is paying attention to the next heating season.

Energy reserves must be replenished during the summer and autumn and reach levels capable of ensuring sufficiency for the next winter, especially if it turns out to be harder and colder than the current one. By the end of this year’s heating season, the remaining stocks are expected to be significantly higher than usual, and therefore Europe will need to buy much less natural gas to replace them. But the volume of available gas from Russia, which in the past made up the bulk of supplies to Europe, will also be less. And the question is how Europe will fill this gap.

According to Morgan Stanley, the increase in inventories will play a role. According to the investment bank, gas supplies from Russia through pipelines in summer will be about 18 billion cubic meters less than last year’s level. This gap will be covered by a surplus of 29 billion m2. which are expected to be available to the most important EU member states. at the end of March compared to the same period last year. As Morgan Stanley highlights, “risks for the 2023-2024 winter season appear to be declining.” At the same time, liquefied natural gas (LNG) will continue to play a key role. At some point in the winter, LNG imports reached record levels, and BloombergNEF analysts expect them to remain high as major European countries import significantly more than usual during the summer. Frozen fuel supplies are now critical to the Old Continent and especially to what comes from the US. Moreover, while pipeline fuel flows have been drastically reduced, much more cargoes of Russian LNG have been brought into Europe.

PAO Novatek, whose LNG project in the Arctic part of Russia pumped record volumes of fuel into Europe last year, believes that this region will continue to be of interest to Europe. However, as the managing director of the company Leonid Mikkelson emphasizes, this year production will be reduced by 5% compared to last year due to repair work. And here comes the crucial question of demand. Over the past year, total consumption in the EU and the UK has declined by about 14% compared to 2021, according to the Oxford Institute for Energy Studies. Some analysts, including the Brueghel Institute, believe that Europe will need more energy cuts next winter, especially if the winter turns harsh and Russia cuts supplies further. After all, Germany warned that European households may not be sufficiently complied with and urged households and businesses to reduce their energy consumption.

With a high level of reservoirs, Europe will need less gas, but the amount of gas available from Russia will also be less.

Demand for gas in Europe has long been below normal levels. The natural gas market has taken a sharp turn as fears of a shortage last year could lead to a large surplus this year if demand remains at current levels and extensive LNG imports continue.

Morgan Stanley predicts that gas storage capacity in Europe will reach 59% by the end of the winter season, doubling from the same period last year.

In addition, the mentioned banking giant revised its forecasts on how natural gas prices will be formed in the third quarter of the year. He predicts that they will be at the level of 47 euros per megawatt-hour, that is, at the level that we last saw in August 2021, while just a month ago he was talking about 64 euros per megawatt-hour. However, not everyone shares his assessment.

SBEB AB warned that even if prices remain at current levels for a long time, they could increase consumption and eventually rise to 100 euros per MWh within a year.