EUROPEAN GAS PRICES UPDOWN AGAIN
BLOOMBERG - Feb 1, 2023 - European natural gas futures fluctuated as traders weighed colder weather approaching next week against ample supplies.
Benchmark futures advanced as much as 6% on Wednesday before erasing gains. Temperatures will drop below normal from Rome to Berlin and Stockholm next week, according to forecaster Maxar, though are generally expected to be milder than usual for the rest of the month.
“The relatively mild weather this winter in most of Europe has been fortuitous, with gas consumption down on seasonal averages and gas storage stocks remaining robust,” Deepa Venkateswaran, an analyst at Sanford C Bernstein & Co LLC, said in a note.
The cold spell next week signals the possibility of heavier withdrawals from the region’s gas storage sites, though inventories are still almost 73% full and well above average levels of the last five years. How low they get by the end of the winter will determine the severity of the energy crunch next summer and the following heating season.
Steady supplies have helped to keep gas prices relatively low in recent weeks. Russian gas transit via Ukraine edged up from Tuesday, and liquefied natural gas flows remain higher than usual for the time of the year.
Continued LNG supply is key for Europe, which can no longer rely on Russia for pipeline gas following the nation’s invasion of Ukraine. Traders are also watching progress on restarting the Freeport LNG plant in the US.
Rehden, a major gas storage in Germany, halted operations on Tuesday for three days after a deflagration at a flare. But there’s been no impact on the security of supply, according to its operator.
Dutch front-month futures, Europe’s gas benchmark, were down 2.5% at €55.90 a megawatt-hour at 9:34 a.m. in Amsterdam. The UK equivalent was down 1.4%.