European natural gas headed for a second weekly decline as demand switched from heating needs to securing inventories for next winter.
(Bloomberg) — European natural gas headed for a second weekly decline as demand switched from heating needs to securing inventories for next winter.
Benchmark futures have slid about 45% since the start of the year amid ample supplies and reduced consumption, and fell as much as 1.7% on Friday.
Storage facilities switched to net injections over the last six days, the longest period since the refilling campaign last fall, data from Gas Infrastructure Europe show. Sporadic injections were made since mid-March and over the Christmas holidays amid low demand.
A colder-than-usual start to April meant gas was still being used for heating, reducing inventories. But recent additions have increased stored supplies by almost 1 percentage point. Still, colder weather is forecast in northwest Europe later in April.
“Demand has declined lately, as Europe starts to fill up the storages again ahead of the next winter,” analysts at trading firm Energi Danmark A/S said in a note. “The market continues to receive mixed signals amid near-term supply issues, which is offset by mild weather forecasts and high storage levels following the mild winter.”
Stored gas played a crucial role over the last winter after supplies via pipelines from Russia dwindled. Countries in Europe tried to save fuel over the summer, and stocked up supplies with imports of liquefied natural gas from nations such as the US.
European Union targets aim to have the region’s storage sites 90% full by Nov. 1. But stockpiles could be 100% full already by late August unless LNG imports slow, Morgan Stanley analysts said earlier this month.
Dutch front-month futures, Europe’s gas benchmark, were down 1.3% at €41.57 a megawatt-hour at 9:39 a.m. in Amsterdam.
Expectations for key French LNG terminals to restart after strikes are also pressuring prices. The Montoir terminal, which hasn’t received a shipment since early March, is scheduled to resume over the weekend.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.