European natural gas prices declined as persistent warmer-than-normal winter weather reduces demand and eases stress of the region’s energy systems.
(Bloomberg) — European natural gas prices declined as persistent warmer-than-normal winter weather reduces demand and eases stress of the region’s energy systems.
Benchmark futures fell as much as 6.5%. Unseasonably mild temperatures are set to remain across continental Europe next week, forecasts show.
The weather has eased concerns about blackouts and rationing as stockpiles remain fuller than average, and there are less risks they will be depleted to dangerous levels over the winter. In fact, Europe has been able to add more gas into storage in the last few days amid a mix of curbed heating needs and typically lower consumption during the holiday season.
A return of stronger winds in parts of Europe is also helping reduce the need for gas to generate electricity. Germany is expected to produce near record wind power on Wednesday, according to a Bloomberg model.
“Relatively weak demand and comfortable supply have made European gas stocks switch to net injection mode,” EnergyScan, an Engie SA analysis platform, said in a note. They have “helped ease fears for the coming weeks.”
Dutch front-month gas futures were 4.2% lower at €73.80 a megawatt-hour as of 10:23 a.m. in Amsterdam. The UK equivalent contract fell as much as 4.3%.
European prices had a record monthly decline in December, bringing relief to consumers and governments after a brutal year when they rose to record levels over the summer. Still, they’re much higher than the typical levels for the time of year, and any disruption in supplies could tighten the market again.
–With assistance from Anna Shiryaevskaya.
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