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Alexander Stahel 🌻 Profile picture
@BurggrabenH
Nov 24, 2021 • 22 tweets • 8 min read • Read on X
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What is the Status Quo of the EU gas crisis?

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!

1/...
As of today, EU gas storage tanks are 72% filled. This is WELL below its 5-year averages.

2/...
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.

3/...
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.

4/...
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.

5/...
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?

6/...
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.

7/...
Is that overcompensated by over-proportational injection rates for the time of the season. Answer: not at all...!

8/...
Who is withdrawing gas faster than usual. France, the 2nd largest gas consumer, certainly is.

9/...
But Italy is also quick to withdraw seasonally.

10/...
Germany is below average for now. But winter has now arrived in the south. So this may well change rather quickly.

11/...
Austria, the gas hub for Central & Eastern Europe is also increasing withdrawals at a fast clip now.

12/...
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).

14/...
The Nordics? About average cold, with an above average mid-December.

15/...
Mediterranean Europe (Italy, Spain, et al)...below average cold for next 35 days.

16/..
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.

17/17 (thx, pls share)
Just in case you are not familiar with EU gas numbers, here some help in billion cubic meters - BCM (35x more than cubic feet):

#natgas #EU
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!

#LNG
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.

Below a EU pipeline map...

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More from @BurggrabenH

Alexander Stahel 🌻 Profile picture
Nov 3
Let's talk China: Episode 5 of 7

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 Image
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.

2/n Image
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.

3/n Image
Read 7 tweets
Alexander Stahel 🌻 Profile picture
Oct 29
Let's talk China, shall we? Episode 4 of 7

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 Image
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).

2/n Image
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.

3/n Image
Read 6 tweets
Alexander Stahel 🌻 Profile picture
Oct 20
Let's talk China, shall we?

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 Image
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?

2/n
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.

For too long, the CCP had their back.

3/n
Read 10 tweets
Alexander Stahel 🌻 Profile picture
Sep 21
Pre-2020, Gold had one marginal buyer, that being gold-backed ETFs.

Today, gold has at least 3 marginal buyers that can overlap or alternate each other. They are:

- Gold backed Western ETFs (which buy, sell or hold based on US real rates);

- Central Banks seeking higher gold reserves (China; India; Thailand; Vietnam; Qatar, KSA or even Poland) for geopolitical & other reasons;

- Chinese & other Asian wholesale or retail market participants and professional speculators;

Who bought most last? India!

Why? The government cut import duties on gold by 9% at end of July, triggering a renewed surge in demand. “The impact of the duty cut was unprecedented, it was incredible,” said Philip Newman, managing director of Metals Focus in London. “It really brought consumers in.”

At least for now, there seems to be always somebody.

1/nImage
Note however that Chinese retail buying has slowed down recently, as best illustrated by the Shanghai gold premium over international prices.

I will elaborate on the Chinese retail clients more soon.

2/n Image
However, professional Chinese speculators have increased their futures positions somewhat again. Who is the better indicator of what comes next, retail or the pros? IDK

3/3 Thx Image
Read 5 tweets
Alexander Stahel 🌻 Profile picture
Sep 4
In 2023, I said I will tweet less about oil and I will stick to this promise but today I make an exception and will break the promise as we enter a period of more volatility for oil...

So let's talk about OPEC and Saudi market share. It's decision making time.

1/n
Step by step:

The Saudis decided to keep oil from falling <$75 for 2y by cutting overproportionally in their OPEC+ quota context.

They have cap for 12mbpd but produce 9mbpd. It was 10.5mbpd in 2022. Pick a number but they are 15-20% below their fair share.

2/n Image
Why did they do so?

Likely because of bad advisers. There is a whole crew of supply gloomers out there charging clients money to claim the Permian or US shale is about to roll over.

Well, it isn't.

3/n US weekly DOE crude oil Image
Read 14 tweets
Alexander Stahel 🌻 Profile picture
Jun 18
Let me share some real time data on the EU natgas market that are hard to get.

European gas consumption for 28 countries matches last's years to the cubic meter (Oct 2022 - Oct 2023 = Year 2022).

However, consumption remains 17% below 2019/20 season.

Is there a supply issue? Rubbish. The global LNG market is oversupplied from every corner; EU storages will be filled by end of Aug where we sit. We have too much gas.

#TTF 1/4 (in mcm/day and YTD)Image
Three factors matter why there is less consumption vs 2019/20 season:

1) Milder weather: 70% of total consumption is temperature related. Temperatures are milder, thus Europe consumes 14% less vs 2019/20.

Is that permenant? It sure looks like a trend where I sit. But climate scientists can answer that best.

Households Consumption; 2/4Image
2) Less power generation: Europe replaces more and more natgas in the grid with solar & wind and in the case of France with better capacity utilisation of its nuclear fleet. That adds up...!

Selected Power Consumption: 7 countries; 3/4 Image
Read 4 tweets

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