European natural gas prices extended a five-week decline as muted domestic demand defused the need for more aggressive purchases to fill up inventories.
(Bloomberg) — European natural gas prices extended a five-week decline as muted domestic demand defused the need for more aggressive purchases to fill up inventories.
Benchmark next-month futures fell to trade near €36 a megawatt-hour on Monday, close to the lowest levels since July 2021. Prices have more than halved since the start of this year amid stable supply, mild weather and stronger contributions to power generation from renewables.
After Russia’s invasion of Ukraine caused energy prices to skyrocket last summer, Europe has seen a much calmer start to 2023, with imports of liquefied natural gas from across the globe making up for large amounts of curtailed supplies from Russia. Inventories in the region are now more than 60% full — some 20 percentage points higher than the average of the last five years — after a month of net injections.
“This is a unique period where it appears that the main demand centers of Europe and East Asia are already well supplied going into the summer, which lays a strong foundation for building up storages going into the winter,” said Lu Ming Pang, an analyst at Rystad Energy AS.
Relatively muted demand in rival Asian markets is helping Europe, even as risks remain if a hot summer provokes elevated cooling demand.
For now, natural gas purchases remain slower than usual for this time of year despite declining costs, suggesting that some traders expect prices may continue to slide.
Dutch futures fell 1.8% to €35.92 a megawatt-hour at 10:13 a.m. in Amsterdam.
German next-month electricity was little changed, trading at €93.67 per megawatt-hour.
–With assistance from Eamon Akil Farhat.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.