European natural gas prices started the new year with slight gains as traders faced low holiday liquidity and a mild weather outlook.
(Bloomberg) — European natural gas prices started the new year with slight gains as traders faced low holiday liquidity and a mild weather outlook.
Benchmark futures settled higher on Monday after initially falling to the lowest level since before Russia invaded Ukraine. While weather forecasts point to temperatures above seasonal norms for most of the region in the next two weeks, Europe still needs to manage its stocks carefully as it goes through the winter.
After a year of extreme volatility — with energy costs reaching record highs amid the war on Europe’s borders — 2023 will pose new tests for the continent as it seeks alternatives for curbed Russian flows. At the same time, imports of liquefied natural gas helped to drive benchmark prices some 47% lower in December.
The overall volume of trading was lower on Monday due to a holiday in the UK.
Milder temperatures for an extended period, together with a typical year-end slowdown in industrial demand, may help the region keep inventories well stocked until the end of the season.
German Chancellor Olaf Scholz said the energy crisis triggered by Vladimir Putin’s invasion of Ukraine was a “tough test” for the continent’s biggest economy and urged citizens to continue saving energy in the months ahead. Germany’s gas storage levels rose to 90% over the past week, compared with a five-year average of 73% for this time of year, according to Gas Infrastructure Europe.
New LNG import terminals “are making our country and Europe independent of Russian gas for the long term,” Scholz said in his New Year’s address to the nation.
Dutch gas futures for next month closed 0.9% higher at €77.02 per megawatt-hour in Amsterdam.
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