A short thread in charts on why we are here & where the EU gas crisis is aheading next.
Summary: EU gas security is a prayer, not a policy!
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As of today, EU gas storage tanks are 72% filled. This is WELL below its 5-year averages.
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Expressed in Terra Watt Hours (TWh), the EU has 809 TWh of storage as at 21 November 2021.
For perspective: In the winter 2017/18, the EU consumed 770 TWh from 1 Nov 2017 - 31 March 2018.
Gas storage couldn't go that low bc pipeline systems needs to stay under pressure.
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There are three MAIN reasons why EU storage tanks are well below their averages at the start of the winter season. There are smaller reasons which we disregard.
1. Gazprom did not fill its EU storage tanks in Germany, Austria and the Netherlands.
The 2nd reason is that EU produced 12% less gas when compared to 2019 (pre-Covid) due to NL's Groningen field reduction (quota production due to earthquates) & natural field declines in UK. These declines are structural, not seasonal. Only Norway re-invests in production.
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The 3rd reason: 14% less LNG imports when compared seasonally. Is that structural? It depends! Fact is that Asia will continue to try to out-bid the EU for EVERY SINGLE marginal LNG tanker as its natural gas demand needs to replace coal. Maybe @OKalleklev wants to comment?
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So let us now look at how the EU is withdrawing its gas from a seasonal perspective.
Answer: We are withdrawing gas quickly from a 5-year average perspective.
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Is that overcompensated by over-proportational injection rates for the time of the season. Answer: not at all...!
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Who is withdrawing gas faster than usual. France, the 2nd largest gas consumer, certainly is.
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But Italy is also quick to withdraw seasonally.
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Germany is below average for now. But winter has now arrived in the south. So this may well change rather quickly.
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Austria, the gas hub for Central & Eastern Europe is also increasing withdrawals at a fast clip now.
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So, going forward, the only thing that matters for EU gas is the weather forecast. If the weather is colder than 2017/18, TTF will go literally to the moon from here bc demand must be destructed.
What is the forecast right now? For Central Europe, as of today the forecast below
North West Europe? Slightly below average temps (red line vs green line).
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The Nordics? About average cold, with an above average mid-December.
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Mediterranean Europe (Italy, Spain, et al)...below average cold for next 35 days.
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In sum, withdrawals are ahead while weather indicates avg cold. Yet, TTF will not calm due storage % & price convergence with Asia (marginal LNG gas barrel). If weather forecast go below avg, TTF will go higher.
Context: EU = 540bcm market; US = 950bcm; Asia = 700bcm going to 1200bcm by 2040.
Point is: Of the big 3, ONLY US has excess gas. Both EU & Asia depend on pipeline & LNG imports from Russia, Qatar, Africa & Australia. Gas crisis = a structural deficit crisis!
So now that u understand that the EU/Asian gas crisis has many structural elements and is not going away, potentially ever, here is one way to express the view as an educated investor…
By the by, the looming Russian-Ukrainian conflict does not help to calm TTF due to existing pipeline system - ex Nord Stream (Baltic Sea) & Yamal (Belarus) - relying on Ukraine as transit hub to bring natgas from Russia to EU.
On this platform, certain perma bulls keep pushing a bullish crude narrative based on relative U.S. inventories—day after day, for three years now.
Their logic: Total U.S. crude inventories (including the SPR) are at 838 million barrels (orange line), 200 million barrels below the 10-year average → bullish!
Yet, inventories keep falling, and prices remain stuck in a range. Clearly, they are wrong.
1/9 @UrbanKaoboy @Iris62655179 @BrentRuditLeo
The problem with their logic?
a) The U.S. is no longer the marginal importer of crude oil—Asia is (or was).
b) U.S. inventories are artificially high on a 10-year average due to the shale boom, which took off in 2014. Shale growth and Covid distort the data, keeping inventories (ex SPR) elevated. So any 5- or 10-year comparison is meaningless—period.
2/n US Crude Oil Inventory ex SPR
Including SPRs, the picture looks more normalised - but not tight. But does the US really need 700mb of strategic reserves in 2025? I don't think so.
Yesterday, I shared a few thoughts that I’d like to expand on, especially given how volatile the current tariff landscape under this admin has become.
Navigating it isn’t just difficult—it’s nearly impossible to avoid missteps. Hopefully some traders will expand on my thoughts...
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What do we know?
As at 23 March 2025, Comex copper price in New York is trading at 14% premium to LME in London. Buying a tonne of copper in NY costs $11,213 versus 9,842 in London, $1,371 per tonne more than in London.
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Why is that? Because of tariff FEARS, not tariffs.
Traders are hedging future risk of potential tariffs on all forms of the raw material, such as cathodes, concentrates, ores, and even scrap. But there aren't such tariffs in place for copper yet (unlike alumnium).
The current Comex price action in the U.S. is basically a Trump tariff trade mirage and is otherwise as misleading of fundaments as the May 2024 price action of which I warned on multiple occasions.
1/n $/pound
In May 2024 however, U.S. price action was more in synch with London. But it didn't reflect weak Chinese housing & construction fundamentals which has been 15-30% of GLOBAL copper use for the past two decades. Today, U.S. prices trade as if borders close tomorrow.
2/n Comex - LME arb in $/t
Unlike May 2024, copper blue chips like $FCX, however, do not buy the rally. So at least it seems that the equity market understands the tariff aspect of the copper price mirage.
In this episode, we discuss China's 2nd of 5 economic paths it can follow.
This episode will also focus on Xi the leader. To understand Xi means to better understand China's economic path forward.
1/n #China
Can China replace malinvestment with more consumption?
Answer: Maybe a little bit & over a long time frame, but President Xi does not want to focus on this path. Instead, he wants to implement his socialist utopia.
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Yes, China’s rising entrepreneurs were welcomed by the Communist Party for at least two decades. But all of that is in reverse.
Under Xi Jinping, China has moved full circle: from low growth & low freedom in the pre-reform era back towards something similar today.
In this episode, we discuss China's investment-led growth model & the first of 5 economic paths China can follow.
As you would expect, also this episode is full of Chinese characteristics!
1/n #China
Starting in 1990s, China’s economic engine has been fueled by capital investments.
Its central planning bureau defined GDP targets, picked winners and drove growth from debt-driven capital formations (green line).
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Has any other nation tried this before, ever? Not to our knowledge.
We checked at ALL G20 economies and their respective growth models for past 70 years. 45% capital formation share is a unique experiment in economic history.
Over the past 3 years, we made some controversial calls in commodities. We decided to exit our oil holding in Aug 2022, we went short natgas in early 2023 or called for copper to go lower in May.
Why? Because we have an egde on China.
1/n #China
Yes, mainstream media picked up pace on important issues facing China today.
Most came to understand that the property bubble burst, that the economy is slowing, that geopolitical frictions are emerging, that there is too much debt.
But do they understand the underlying forces that drive these issues?
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While the majority of these facts are known, most Western observers, investors & industrialists do not fully appreciate their interdependence & the structural changes that are unfolding in China today.