Warm Asian winter could ease Europe's LNG squeeze: Maguire
By Gavin Maguire
LITTLETON, Colorado, Nov 5 (Reuters) - Europe's gas prices have hit multi-year highs as traders fret over low storage levels. But unusually warm weather forecasts across Asia may offer some relief this winter, as less demand for heating in the Far East may free up LNG supplies for Europe.
Forecasts point to significantly above-normal temperatures across several of East Asia's largest gas-consuming economies between December and March, due largely to a strong El Niño weather pattern that tends to result in milder and wetter conditions across much of Asia.
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According to LSEG, temperatures across Japan, South Korea, Taiwan and northern China are all forecast to average roughly 3 degrees Celsius (5.4 degrees Fahrenheit) above normal between December and March.
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Because winter heating is one of the largest sources of seasonal gas consumption across Northeast Asia, even modest reductions in heating demand can translate into several million metric tons of LNG that no longer need to be sourced from spot markets.
FAR EAST FALLOUT
China, Japan, South Korea and Taiwan have accounted for roughly 55% of total imports of liquefied natural gas since 2016, according to data from Kpler, and collectively are the most influential bloc of LNG buyers.
During particularly cold winters, East Asia's share of total LNG imports has climbed substantially higher, and hit a record 68% of world imports during the first quarter of 2018 and 63% in the first quarter of 2021.
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In tonnage terms, East Asia's purchases can also be volatile, and stray widely from the average of around 49.5 million metric tons per quarter seen since the start of 2016.
During the cold snap during the first quarter of 2021, East Asia's total LNG imports hit just over 61 million tons, marking a 23% increase from average as utilities cranked up gas burning to cater to higher heating demand.
During milder winters, East Asia's collective imports have averaged closer to 55 million tons during the fourth and first quarters of the year, or around 10% above the overall quarterly average for the past decade.
For competing LNG buyers, the difference between a strong demand period and an average demand period for LNG in East Asia can mean significantly different market conditions, with higher prices and tighter supplies typically prevailing whenever East Asian buyers are in the midst of a buying spree.
EUROPE'S REPRIEVE?
For the upcoming winter, Europe's LNG importers will be hoping that East Asia's demand needs hold at or below normal levels, so that competition for supplies is less intense than during previous Asian cold snaps.
Acute shortages of LNG supplies have emerged this year following the collapse in LNG exports from Qatar due to damage incurred during the US and Israeli war with Iran.
Qatar, the world's second-largest LNG exporter in 2025, has seen total LNG exports drop by 65% during the opening nine months of 2026 from the same period in 2025, Kpler data shows.
That roughly 40-million-metric-ton plunge in Qatari shipments has resulted in a surge in exports from rival LNG sellers, especially the top exporter the United States, which has lifted exports by 22% so far this year to all-time highs.
However, the Middle East disruptions have also triggered a steady climb in Asian LNG prices, which so far in 2026 have averaged $19.15 per million British thermal units (MMBtu), according to LSEG.
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That price marks a 58% surge from 2025's average, and has stung cost-sensitive consumers and forced cuts to overall use.
Gas consumers in Europe have also faced steep increases in local benchmark prices.
Natural gas prices at Europe's main trading hub in the Netherlands have climbed by 51% from 2025's average to average around $18.06 per MMBtu so far in 2026, LSEG data shows.
A major driver of the recent strength in European gas costs has been restocking efforts by gas storage operators, who are responsible for ensuring the region has adequate inventories for the winter heating period.
Gas stockpiles within the European Union are currently around 75% full, compared to an average of around 91% full for this time of year since 2020, data from LSEG shows.
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The shortfall compared to normal has raised jitters among major gas consumers and policymakers, and has triggered spurts of precautionary buying by utilities seeking to hit mandated storage targets.
CATCHING UP?
While Europe's total gas inventory levels remain below average, the recent pace of net gas injections into storage depots has accelerated above the levels seen at this time of year in 2025 and 2024, LSEG data shows.
This means that tank farm operators have picked up the refill pace notably from earlier in the year.
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Going forward, if demand from Asia's LNG buyers weakens in response to the warm weather forecasts, Europe's storage operators may be able to further accelerate their restocking efforts while facing less competition for spot cargoes.
That would be a welcome shift for a region that has seen gas prices surge as inventories languished below normal levels.
Europe's gas market remains vulnerable to global supply shocks. But after years in which wars, sanctions and pipeline disruptions determined energy costs, the key variable this winter may be far more mundane.
If East Asia's mild-weather forecasts prove correct, Europe's ability to rebuild gas inventories may depend less on what happens in the Middle East than on how often households in Tokyo, Seoul and Beijing need to switch on the heat.
The opinions expressed here are those of the author, a columnist for Reuters.
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