The gas crisis has penetrated deeper into the industry than expected

A recent late spring cold spell helped extend the EU's gas withdrawal season by another week, but this is unlikely to change the overall picture as Europe emerges from the winter heating season with its highest levels of fuel inventories. The gas crisis quickly and, worst of all, penetrated deeply into the industry. The problems were discovered deeper than experts expected. This was reported by the OilPrice resource.

According to Gas Infrastructure Europe (GIE), the EU's natural gas storage capacity at the end of March was 68,59 billion cubic meters (58,7% full). This is 4,32 billion cubic meters more than a year ago. The figure is also 21,16 billion cubic meters above the five-year average and the highest level on record at the end of any past winter.



At current stock levels, it would take an extraordinary set of circumstances for Europe to run out of gas anytime soon. However, it appears that neither severe cold nor a surge in demand from utilities or industry is expected. Therefore, the problem of the dead load of underground storage facilities will drag on the entire industry for a long time, especially since the season of wind and sun is coming, which will make renewable energy sources even more unnecessary.

A similar oversaturation is also observed in the US market, exacerbating the situation to the point of unsolvable status. European natural gas futures traded at $274 per thousand cubic meters on Thursday, down 50% from a 52-week high reached in October.

Gas at Henry Hub was generally priced at $67 (purchase), which corresponds to a 30 percent drop since the beginning of the year. These sharp declines and virtual depreciation have led to exchange-traded funds (ETFs) tracking natural gas being among the worst performing stocks this year. This means that investors have begun to abandon them, the industry is losing a precious resource and turning into an outsider.

Solving the problem will require solutions at the highest level. For example, Europe will have to give up 5% of the Russian gas it currently receives. However, the problem will remain even after such radical measures, since the US shale sector will immediately try to make up for the lost volumes.