European gas prices are set for one of the biggest weekly losses since the end of last year as mild weather curbs demand and supply concerns ease.
(Bloomberg) — European gas prices are set for one of the biggest weekly losses since the end of last year as mild weather curbs demand and supply concerns ease.
Benchmark futures fluctuated on Friday, while still heading for a weekly drop of more than 15%.
Above-normal temperatures are forecast in the final two weeks of the heating season. That will ease pressure on storage sites, which typically switch to net injections in early April. Storage facilities are now about 56% full, which means less gas than usual will need to be replenished over the summer.
Despite US liquefied natural gas exports becoming more profitable to Asia than Europe in May, June and July, for now the fuel keeps arriving at European terminals at levels that are higher than usual for the time of the year. That’s even as strikes block French import terminals for a second week, with vessels diverting elsewhere in northwest Europe.
In addition, France’s most recent nuclear woes appear not to have shaken confidence in output expectations. After a new crack was found on a pipe at one of its reactors last week, Electricite de France SA said it would keep its French nuclear power production forecast for 2023 unchanged even as it expands its reactor inspection program.
A rally in European gas prices following the news of the crack is “potentially overdone if French nuclear generation is still up year-on-year in 2023,” consultancy Energy Aspects Ltd. said in a note. And while upside risks on non-European LNG demand are materializing, they are offset by weak Chinese growth, it said.
Dutch front-month futures, Europe’s gas benchmark, were down 1.5% at €43.70 a megawatt-hour at 9:44 a.m. in Amsterdam. The UK equivalent decreased 1.5%.
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