BAKU, Azerbaijan, Aug.15. EU is likely to reach gas storage target set for November 1, Trend reports via Fitch Solutions.
“UK NBP prices remain stubbornly elevated, with levels creeping higher in the last week to GBp390/ therm from GBp370/therm the previous week. Dutch TTF prices are marginally higher and continue to hover just above the EUR200/MWh mark, which is near the post-invasion high set in March. Voluntary rationing efforts have been proposed across the bloc but have yet to be evenly implemented leading to fears that a supply shortfall can only be avoided through rationing during the winter. The uncertainty around the supply outlook has continued to add price upside with no immediately relief from increased supply due in the near-term. Lower seasonal demand for natural has begun to tilt higher as high temperatures and poor renewables generation conspire to see gas consumption for power increase,” reads the latest report released by Fitch Solutions.
The company analysts point out that despite the higher consumption, the EU continues to build its storage of natural gas.
“EU storage levels of natural gas have topped the 73 percent of capacity making the November 1st target of 80 percent increasing likely. Extreme temperature events could raise consumption temporarily which could also impact storage builds as the summer season progresses,” reads the report.
As for oil, Brent crude is currently trading at around USD98/bbl, having posted moderate gains week-on-week.
“Prices have come under pressure, as recession fears mount, with the ongoing deceleration in economic growth posing rising downside risks to oil demand. High prices at the pump have been impacting on consumption, particularly in developed markets such as the US, although ongoing and expected gas- and coal-to-oil switching is offering some support on the demand side. Supply remains constrained, with OPEC+ committing to just a 100,000b/d output rise in September and US shale production growth curbed by rampant cost inflation and financial discipline among listed E&Ps,” reads the report.
That said, Fitch Solutions expects the Iranian nuclear to be concluded over the coming weeks and, if signed, this should allow for the release of over 1mn b/d of sanctioned barrels back to market.
“We hold to our current forecast for Brent crude to average USD105/bbl in 2022 and USD100/bbl in 2023.”
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