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Tsvetana Paraskova

Tsvetana Paraskova

Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. 

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The World Faces A Natural Gas Glut Not Seen in Decades

  • Weaker demand due to milder 2023 and 2024 winters, the energy-saving targets, and sluggish industrial demand in the EU sent natural gas stocks higher and prices lower.
  • Europe just exited the winter heating season with its highest level of natural gas left in storage.
  • WoodMackenzie: Gas prices in Europe could plunge as low as $6.70 per MMBtu this summer thanks to a mild winter and ample gas inventories.
Gas Storage

Two warmer winters in a row have lifted natural gas inventories in the United States and Europe and have eased concerns about supply, which were sparked by the Russian invasion of Ukraine and the cutoff of most of Russia’s pipeline gas supply to the EU.   

U.S. inventories of natural gas in the week to March 22 were 41% more than the five-year average and 23% higher than last year at this time, per the latest EIA data

Europe, for its part, just exited the winter heating season with its highest level of natural gas left in storage. As of April 1, the EU’s natural gas storage capacity was 58.7% full, according to data from Gas Infrastructure Europe. That’s a record-high level of stocks at the end of any winter in any year so far.  

Weaker demand due to milder 2023 and 2024 winters, the energy-saving targets, and sluggish industrial demand in the EU sent natural gas stocks higher and prices lower.

As LNG exporters, most notably Qatar, announced major new expansion projects, the world could soon face a gas glut, analysts say.  

“We expect gas market oversupply to reach multi-decade highs over the coming years,” Morgan Stanley said in a recent note carried by CNBC. Related: Gold Prices Have Surged 23.3% in the Last Six Months

Currently, the global LNG market capacity is around 400 million tonnes per annum (mtpa). But another 150 mtpa are under construction now, which would be a “record wave of expansion,” according to Morgan Stanley’s commodity strategists.

A comfortable supply of natural gas would be good news for consumers everywhere. If lower prices persist, they could incentivize more demand across the U.S., Europe, and Asia, thus leading to higher prices and higher gas output in the United States, where gas producers are preparing to turn in line nearly finished wells as soon as prices start moving higher.

The oversupply and low natural gas prices in the U.S. have prompted many producers to start reducing production. But some are also stocking up inventories of wells ready to start pumping as soon as prices rebound. Producers expect natural gas prices to recover next year amid growing demand for LNG exports and new LNG export plants that are slated to begin operations in 2025.

Despite multi-year low natural gas prices in the United States, domestic producers continue to be optimistic about the long-term prospects of gas as a fuel, both in America and abroad.  

In Europe, the EU member states agreed last month on a recommendation to continue voluntary demand reduction measures, encouraging the countries to continue reducing their gas consumption until March 31, 2025, by at least 15% compared to their average gas consumption between April 1, 2017, and March 31, 2022.

Although the volume of 100% full storage sites accounts for only about a quarter of EU consumption during the winter, the high EU stock levels—at over 58% full—at the start of the refill season in April would make it easier for Europe to reach in advance, again, its target to have capacity 90% full by November 1.

This year, however, could be the last for Russian pipeline supply via Ukraine as the multi-year transit deal ends on December 31. Both Ukraine and the EU have signaled they wouldn’t extend the transit agreement, which puts some central European EU members, such as Austria and Slovakia, in the most vulnerable position for gas supply.  

Gas prices in Europe could plunge as low as $6.70 per million British thermal units (MMBtu) this summer thanks to a mild winter and ample gas inventories, Wood Mackenzie said in a report last month.

“High storage levels create downside risk to prices as the summer progresses. With storage levels close to full capacity, we estimate there will be up to 10 bcm of excess supply,” said Mauro Chavez, Head of European Gas and LNG markets at WoodMac.

The excess supply will have to be absorbed either through floating LNG or using available storage in Ukraine, and this requires a summer-winter differential of more than $2/MMBtu, the consultancy says.


In Asia, ample LNG availability could spur purchases from the price-sensitive buyers in south and Southeast Asia, such as India and Thailand.

Low prices and sufficient supply could create more demand, which would absorb the currently predicted glut in the global gas market.

By Tsvetana Paraskova for Oilprice.com

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  • Mamdouh Salameh on April 04 2024 said:
    Those who are talking about a glut in the global gas market should look beyond their nises.

    It is projected that global gas demand is projected to rise by 50% from 450 million tons (mt) in 2023 to 675 mt by 2034 or 5% per annum. It is also projected that global gas trade will rise from $600 mt in 2023 to between $680-$700 by 2040.

    Dr Mamdouh G Salameh
    International Oil Economist
    Global Energy Expert

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