On January 7th, Caixin reported (editor Ma Lan) that cold weather in Europe has led to increased heating demand, forcing Europe’s Henry Hub Natural Gas reserves to be consumed at the fastest rate in seven years. Although this will not trigger a gas shortage in Europe, it is enough to cause market concerns.

According to data from European gas infrastructure, current Henry Hub Natural Gas storage levels in Europe are just over 70%, down from about 86% at the same time last year and 25 percentage points below last year's peak.

Samantha Dart, head of gas research at Goldman Sachs Group, expressed concern that the lower the EU's gas storage levels at the end of March, the more difficult it will be for the region to replenish stocks before next winter, especially under current forecasts of temperatures being below average.

However, concerns about next year cannot prevent the continued decline of spot market prices. On Monday, European gas Futures fell to 47.9 euros per megawatt hour, down about 5% from last week's peak.

Summer is where the main event lies.

Starting this year, Russia will no longer be able to export pipeline gas to Europe through the Ukraine pipeline. Although the gas supplied through this route accounts for only 5% of total EU imports, market analysis suggests that Austria, Hungary, and Slovakia will still be severely affected.

Fortunately, Slovakia has found alternative supplies, and Azerbaijan's state-owned oil company SOCAR has begun supplying gas to Slovakia's largest state-owned energy Operation SPP.

However, due to the EU's heavy reliance on liquefied Henry Hub Natural Gas supplies, this may mean that it will face higher price risks and threats of shortages.

Starting this week, Europe will experience a significant drop in temperature, with much of its northwest already turning cold, which means that the volume of gas used for heating will further increase, potentially igniting concerns over gas supply.

Additionally, the region's top suppliers of liquefied Henry Hub Natural Gas have also experienced unexpected production halts. Norway's Hammerfest gas plant has suspended operation due to compressor failures and is expected to resume supply on January 9.

All these concerns have prompted Analysts to remain Bullish on the future of Henry Hub Natural Gas. Florence Schmit, a European Energy strategist at Rabobank, believes that the current price drop might be a technical reversal following a recent increase. She indicates that market sentiment remains Call, but the market is adapting to a "new normal."

Economists also warn that the decline in natural gas stock levels in Europe this winter could keep prices elevated throughout the summer, as EU countries generally begin to replenish their stocks in spring and summer.

Editor/ping