Europe's Gas Storage Refill Falters Amid El Niño Risk

Europe's natural gas storage refill is running behind pace, raising concerns about an El Niño risk. The warmer forecast has tightened the margin between natural gas futures in Europe and Asia, with thin European storage and Middle East supply risk keeping a pull on Gulf Coast cargoes tight.

European gas storage levels are below normal, making it harder to meet demand during peak winter periods. This situation is exacerbated by El Niño odds topping 90%, which could bring warmer temperatures and reduced natural gas demand in the region.

The European Union's reliance on flexible LNG imports has also increased, with Europe outbidding Asia for these cargoes. Meanwhile, nuclear power plants in Sweden and Finland are operating at around 60% capacity, helping to offset some of the gas demand.