Welcome to your weekly maverick energy newsletter with views from both sides of the pond! Steno Research and 3Fourteen models align – see how we view the risk/reward in various proxy trades below!

Steno Research: Natural Gas? Wake us up next year. Oil is interesting, though!
I cannot believe we are doing this again, but apparently with the spikes in volatility over the last couple of weeks we need to talk about natural gas in Europe again. Various people have been harping about the Natural Gas markets in Europe, so let’s once and for all lay it out. Nooo, we are not going to run out of gas this winter.

Yes, the supply situation has complicated the situation but that’s a story for next spring, hence the ‘wake me up next year in the spring’. Chart 1 and 2 show how strong we enter the fall in terms of both , where net drawing of gas from storages happens around late October early November. The only assumption to this is the constant flow of LNG and piped gas, where the piped gas through Ukraine is the only bit if. Then there is the other side of the coin of course, namely the weakened demand where the hikes from central banks in Europe are starting to be felt (See GDP of industrial heavy economies like Sweden and Germany)

Europe’s natural gas storage is exceptionally strong, exceeding previous years and ahead of schedule. These levels reflect effective demand decreases by consumers and industries but also the blunt force of central bank hiking.

Chart 1: Its early August and we are 6 percentage point away from the 01.11 target