October 23, 2023 [Oil Price]- While Europe is in a much better position in terms of energy supply heading into this winter than it was last year, Norwegian energy giant Equinor warns that markets will remain volatile due to weather and expectations of new competition from Asia for LNG, which would drive prices up further.
Despite Europe’s better preparedness this year, “We actually expect the market to be quite volatile over the winter,” Equinor CEO Anders Opedal told the Energy Intelligence Forum in London on Wednesday.
“We will do everything we can to make sure that we maximise gas to come through the pipes, but Europe will be dependent on the LNG (liquefied natural gas) supply,” Opedal added, as reported by Reuters.
Equinor is the largest gas producer on the Norwegian continental shelf, and the second-largest gas supplier in Europe, supplying more than 20% of Europe’s gas.
The European Union has now managed to store record amounts of natural gas ahead of schedule for winter. As of early October, gas storage in the EU was close to 100% full. This record-full storage, however, does not fully cover consumption.
In early Wednesday trading, we saw Dutch wholesale gas prices rise on the escalating Middle East conflict in the wake of the Hamas attack on Israel and a missile strike on a hospital in Gaza, for which blame is still being apportioned and denied. The Dutch TTF November gas contract was up nearly 4% on Wednesday, tracking a nearly 2% rise in oil prices over Middle East uncertainty.
On the flip side of this, Europe has also lost some demand for natural gas as a direct result of the energy crisis and soaring oil and gas prices, which dampened industrial demand. Trader Vitol Group on Tuesday told the same Energy Intelligence Forum in London that there have been double-digit percentage reductions in European gas demand and they “expect some of the lost demand to be permanent”.
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