EUROPEAN GAS PRICES UPDOWN ANEW
BLOOMBERG- Oct 31, 2022 - European natural gas fell after two days of gains as unseasonably warm weather reduces demand and eases concerns about shortages for the winter.
Futures for December delivery declined as much as 6.5%. The above-normal temperatures have delayed heating, and allowed gas to continue to be injected into storage sites that are already fuller than normal. Strong inflows of liquefied natural gas and lower consumption by industries are also creating a sudden glut in Europe.
The mild weather may persist in most of Europe through mid-November, according to forecaster Maxar. While the full reserves will provide a buffer for when temperatures inevitably fall, restocking will be harder for winter next year in the absence of the usual supplies from Russia, which has slashed shipments through pipelines to the continent.
The recent fall in European gas prices may not last, according to Italian energy major Eni SpA. “It’s a temporary situation,” Chief Executive Officer Claudio Descalzi said in Abu Dhabi. “We have problems in 2023 because in 2023 we don’t have Russian gas.”
Dutch gas contract for December, Europe’s benchmark, was 5.5% lower at €131.70 per megawatt-hour by 8:42 a.m. in Amsterdam. Prices are almost five times higher than the five-year average for this time of year even after the sharp drop from the highs of August.
Policy makers are trying to bring more measures to ensure the economy is protected from any further surge in prices. The European Commission intends to propose a cap on gas prices using a dynamic price mechanism, which could be in place as soon as this winter, in an effort to curb volatile fuel costs. But many suppliers warn that price interference may boost demand and send shipments elsewhere.
Rival importers may attract cargoes that would otherwise go to Europe by offering just one cent more, Qatar’s energy minister Saad Al Kaabi said in an interview with Bloomberg TV. “The free market is always the best solution,” he said on Sunday.
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