Today, UBS released data indicating that European gas storage levels are below the five-year average, with storage facilities standing at 47% full, or 49 billion cubic meters (bcm) as of February 11. This figure is 5% lower than the five-year average and 20% below the levels recorded at the same time in 2024. The rate of net withdrawals has increased to 4.2 bcm, a significant rise from the 2.1 bcm withdrawal seen a year ago and above the five-year average of 3.7 bcm.

UBS's recent gas note, published earlier in the week, estimated that storage levels could exit the winter in the high-30s percentage range, compared to 58% at the end of March 2024 and the five-year average of 41%. The lower storage levels suggest that Europe will need to import more liquefied natural gas (LNG) to meet the European Union's storage target.

Despite the EU's implied storage target of 77%, UBS calculates that Europe will need to import approximately 155 bcm of LNG, an increase of 17 bcm year-over-year, as opposed to 170 bcm if a 90% storage target were pursued.

In the United States, the Energy Information Administration (EIA) reported that gas in underground storage decreased by 100 billion cubic feet (Bcf) week-over-week to 2,297 Bcf as of February 7. This draw was slightly more than the consensus estimate of a 95 Bcf reduction. Current total inventories are now 3% below the five-year average of 2,364 Bcf, with storage utilization at 54%, under the five-year average of 56%.

UBS's US team has updated their natural gas balance forecast, upgrading the Lower48 supply estimate for 2025 to 112.5 Bcf per day, up from the previous forecast of 111.9 Bcf per day. This adjustment accounts for an increase in supply for the first quarter of 2025.

Demand forecasts have also been revised upward to 113.2 Bcf per day from 112.7 Bcf per day due to higher power generation needs and winter weather conditions. As a result, the US market is projected to be undersupplied by an average of 0.7 Bcf per day in 2025.

Furthermore, UBS mentioned that Germany is seeking exemptions from the gas storage filling targets for this year. The report also noted that new LNG capacity coming online in the US, such as the 10 million tons per annum (mtpa) Corpus Christi stage 3 and the 13.3 mtpa Plaquemine LNG Phase 1, could help meet the increased LNG requirements for Europe.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.