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  • Jonathan Wilmot

For Putin September Was the Cruellest Month So Far

In addition to Russia's battlefield reverses, Europe took a significant step towards energy resilience this winter.


Europe is better prepared for winter than looked likely one month ago (figure 1). Despite reduced supplies from Russia natural gas Inventories across the EU have climbed to 100.5bn cubic meters by mid-October. The rise in September was in line with the long-run average despite reduced supplies for Russia. October inventories normally increase slightly (by around 2.5 bn cubic meters) before increasing drawdowns of around 6, 11. 17, 13 and 6 bn from November through March. So far inventories are up that amount already, amid indications that consumers and businesses are taking action to limit consumption this winter.


That still means European output is vulnerable should the winter be unusually cold (like 2018 for example), or if Russia carries out sabotage attacks on the undersea pipelines that run from Norway to the UK and the EU. A harsh winter in the US may also crimp supplies of LNG from across the Atlantic just when it matters most.


So Europe is not out of the woods yet, but it was probably the good progress being made on filling Europe’s gas storage facilities that prompted Putin to authorise the attacks on Nordstream 1 and 2 in the first place. He was rapidly losing leverage in the economic arm wrestle with Europe and so needed to underline his ability to cause major economic disruption and financial stress through the winter.


Despite a brief spike after the Nordstream attacks, all that is reflected in natural gas futures prices for January 2023 (January is normally the peak month for gas demand in the EU). As of today January Natural gas is trading 50% below it’s peak on 26th August, though still 10x the normal winter range . From a technical perspective January futures are now poised just above major support and the major uptrend in place since June 2022. (figure 2)








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