El Niño Forecast Falls Short of Alleviating Europe's Gas Market Woes

A strong El Niño event is forecast to occur this winter, but it may not be enough to alleviate Europe's natural gas market woes.

Rystad Energy analysis suggests that European winter temperatures would need to rise by at least 2 degrees Celsius above the historical average for LNG demand to fall below last winter's level. While a strong El Niño event is likely, with an 81% probability of rising by at least 2.0 degrees Celsius and a 97% probability of clearing 1.5 degrees, forecasts are uncertain.

The stakes are high this winter due to hostilities in the Middle East pushing up LNG prices and cutting deliveries from the Persian Gulf. A milder winter would be welcome, but the question remains whether El Niño can deliver a strong enough effect to count.