Germany has taken care of gas for the next winter: reserves will be stimulated — gas is already at $ 530

The German authorities are considering the possibility of financial support for companies to actively pump gas into storage facilities for the next heating season. On this news, gas prices in Europe have risen even higher. Due to the shutdown of Ukrainian transit and the colder winter, European storage facilities are being emptied at a record rate for recent years, and prices have already been in the region of $ 500.

On January 21, gas prices in Europe rose to $ 546 per thousand cubic meters, and on January 22, gas supplies for a month in advance from the TTF hub are trading at $ 533. The rapid growth of more than $ 20 occurred after the German hub published for discussion a draft of state subsidies to activate gas injection into storage facilities before the next season.

Traditionally, traders make a decision based on the spread — the difference between current prices and the cost of supplies during the heating season (futures). The essence of the idea is that Berlin is ready to encourage companies to be financially active in storing gas in spring-summer-autumn and pay extra if there is a negative difference.

For Europe as a whole and Germany in particular, the issue of filling in will become more relevant than ever this year. Due to the colder winter, periods of windlessness and the shutdown of Ukrainian transit, UGS stocks have fallen to a minimum since 2022. For example, according to ENTSOG, Germany's storage facilities were filled by 62% on January 20. There were already 15 billion cubic meters in them. Over two and a half months, more than a third of the reserves — 8.5 billion cubic meters - were taken from them.

Thus, by the end of the heating season, Germany may face low reserves that need to be replenished in conditions of high gas prices. At the same time, the current spreads between futures for the summer and next winter do not yet have to do this from a commercial point of view. The difference is minus $ 44 per thousand cubic meters.

In such a situation, some traders can count on spot purchases of gas already during the winter itself, while the German authorities need guarantees of the availability of volumes.

Subsidies from the German government will stimulate spot demand for fuel and further increase the seasonal spread of prices, Bloomberg believes.

"President Trump's goal to increase oil and gas production in the United States will not change the prospects for LNG in the near future. The global supply of LNG supplies will not expand until the end of this year, which suggests that competition for spare cargoes with Asia may put upward pressure on European prices as the bloc seeks to fill a larger shortage of storage this summer," said Bloomberg Intelligence analyst Patricio Alvarez.

Experts noted to EADaily that new LNG plants are being commissioned in the United States this year, but so far they can only be enough to compensate with a creak for the shutdown of the transit of Russian gas (15 billion cubic meters per year). At the same time, European storage facilities themselves may need another 25-27 billion cubic meters to reach last year's figures.

"Germany has already warned Europe against excessive dependence on American energy resources, and Economy Minister Robert Habeck urged the region to stay united in response to the policies of the new Trump administration. At the same time, buyers in Asia are seeking to appease the US president with higher purchases of fossil fuels. It also adds uncertainty to the market," according to Bloomberg.

Deliveries of Russian pipeline gas to Germany, whose main supplier was Gazprom, stopped due to sanctions and counter-sanctions at the end of August 2022. Now German companies rely on supplies from Norway and the USA.

*Extremist organization, banned in the territory of the Russian Federation