In anticipation of the upcoming winter season (November–March), the global natural gas market is poised to meet demand with relatively ample inventories in the United States and Europe. The Winter 2023–24 Global LNG Analysis, recently released by experts, indicates that expanded liquefied natural gas (LNG) export and import capabilities contribute to a favorable supply scenario. However, risks persist, notably from extreme weather events and potential supply interruptions.
The enhanced global LNG export and import infrastructure is expected to bolster natural gas availability during the approaching winter. Projections indicate an additional 4.0 billion cubic feet per day (Bcf/d) of LNG export capacity for Winter 2023–24. The resumption of operations at Freeport LNG in the United States has already elevated global LNG exports by 2.0 Bcf/d this year. Concurrently, a 13% expansion (18 Bcf/d) in global LNG import capacity has been witnessed in Europe and Asia, with expectations of further import projects coming online in Germany and China.
As the winter season begins, natural gas consumers benefit from higher storage levels compared to the previous year. Europe’s natural gas storage stands at nearly full capacity, with 3,657 Bcf (99%) as of October 31, 2023. This volume represents 65 days of natural gas consumption at peak five-year winter usage rates and 84 days at rates observed last winter. Similarly, on-site storage capacity at regasification facilities in Japan and South Korea has consistently maintained full levels throughout the year. In the United States, a key global LNG supplier, storage inventories have surpassed last year’s levels by 8% as of October 27, 2023.
Despite the positive indicators, the global natural gas market is not without its balance risks. Unexpected surges in demand or unplanned supply outages could impact prices and global gas balances. The pace of China’s natural gas demand recovery remains uncertain, and severe cold weather in Europe or Asia could prompt rapid increases in global LNG spot prices. Simultaneous cold weather in both regions could compound this effect.
Further potential risks include unplanned outages, such as production freeze-offs in major natural gas suppliers like the United States or Norway. Disruptions to global supplies could also result from events such as a reduction in pipeline exports from Russia transiting Ukraine, worker strikes at Australian LNG facilities, or the spread of military conflicts in the Middle East. These factors underscore the delicate balance between surpluses and risks in the global natural gas landscape as the winter season approaches.