EUROPEAN GAS PRICES DOWN MORE

BLOOMBERG - Oct 18, 2022 - European natural gas extended its loss for a fourth straight session, as warmer-than-usual weather and high levels of storage temper concerns over winter supply shortages.

Benchmark futures dropped as much as 10.1% to 115 euros per megawatt-hour, the lowest intraday level since mid-June.

 “Strong warmth” is expected in southwest Europe and into the central part of the continent in the coming days, forecaster Maxar said in a report. That trend is set to continue for much of the region over the next two weeks.

Even as prices decline, European Union countries are taking action to blunt the impact of the crisis should futures spike again during the winter. The EU on Tuesday is set to unveil a new emergency package that will include cooperation between states on purchases, according to a draft document seen by Bloomberg News. The Commission is also seeking authority from national governments to propose -- only as a last resort -- price limits on transactions on Dutch hub prices. 

On Monday, German Chancellor Olaf Scholz ordered an extension in the life of the country’s three remaining nuclear plants until mid-April 2023 to help ease the crisis.

Meanwhile, Italy’s Enel SpA is in talks with lenders about a new 16 billion euro ($15.8 billion) loan to cover futures related to energy prices, according to local newspaper Il Messaggero.

Europe’s gas storage facilities are about 92% full, above the five-year average for the time of the year, helped by the warmer weather and high levels of liquefied natural gas imports.

“Gas prices have continued to fall across the continent as strong levels of storage and the glut of LNG have outweighed a potential increase in demand from China due to an expected increase in reserve capacity,” analysts at Alfa Energy said in a note. However, replenishing stocks next year will be difficult without normal volumes of Russian gas.

Dutch front-month gas, the European benchmark, traded 8.1% lower at 117.60 euros per megawatt-hour by 11:09 a.m. in Amsterdam. The UK equivalent traded 6.5% lower at 217 pence a therm. 

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