Efforts to stockpile fuel mean Europe and Asia are approaching winter with healthy inventories as governments seek to counter shrinking supplies from Russia.Europes natural gas storage sites are about 92 per cent full, above the the five-year average of 87.6 per cent.
Germany has hit 95 per cent, a level it aimed to reach by Nov.
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The pictures similar in Asia.
In Japan, stockpiles of liquefied natural gas held by the countrys power generators are also higher than average.The rising reserves are boosting optimism that Europe can avoid shortages or rationing, with natural gas prices falling to the lowest level since June.
The region has been gripped by its worst energy crisis in 50 years as Russia slashes deliveries in retaliation for sanctions imposed over its invasion of Ukraine.
Concerns over energy security have seen governments attempt to build stocks ahead of the upcoming northern hemisphere winter, said Warren Patterson, head of commodities strategy at ING Groep NV in Singapore.
Thats evident in Europe, where gas storage is well above initial targets, he said.With European gas storage sites filling up, energy traders are also storing LNG in vessels.
Some 2.6 million tons of LNG were parked off the coasts of Europe and Asia earlier this month, according to energy intelligence firm Kpler.
Thats the most ever.In Asia, demand for fuel oil, a product refined from crude, is weakening.
Fuel oil imports across Japan, South Korea, Pakistan, Sri Lanka and Bangladesh declined more than 50% last month compared with August, and were more than 40% less than a year earlier, according to data from ship-tracking firm Vortexa.
That followed a flurry of restocking in August when gas prices surged.There are so far few signs of a significant increase in Asian fuel oil demand for power generation, said Roslan Khasawneh, senior fuel oil analyst at Vortexa.To be sure, energy prices still remain at historically high levels as Moscows war against Kyiv drags on, upending trade flows and disrupting raw-material supplies.
Theyre also buoyed by a tight shipping market as increasingly stringent sanctions against Russia kick in.Failure by European countries to cut consumption and a colder-than-normal winter could empty reservoirs quickly and make it harder to fill them next year, particularly with reduced supply of Russian gas.There could be an element of where the market is getting complacent, INGs Patterson said, noting that the peak heating season is still ahead.
But, even more concerning for Europe is the 2023 and 2024 winter, which looks set to be an even tighter period.
This means that elevated gas, LNG and coal prices are likely to persist through much of 2023.Yet some weather forecasts point to a warmer than usual winter over Europe and parts of Asia including Japan, which would limit demand during the peak heating season.
The past few months has seen the largest global effort to stockpile fuels in years, resulting in the healthy supplies we have now, said James Whistler, managing director of energy brokerage Vanir Global Markets Pte.
in Singapore.
Temperatures are currently quite mild across Europe, Japan, China, Korea and that is pushing electricity demand to seasonal lows.--With assistance from Elizabeth Low.