European natural gas prices extended their decline as Shell Plc said strong fuel inventories are a positive sign for the region ahead of winter.
(Bloomberg) — European natural gas prices extended their decline as Shell Plc said strong fuel inventories are a positive sign for the region ahead of winter.
Benchmark futures slipped as much as 4.3% after slumping 10% on Wednesday, which was the biggest drop in over a month. Storage sites are more than 84% full on average, with at least two months to go before the start of the heating season.
“I am encouraged by the stockpiles that Europe has,” Shell Chief Executive Officer Wael Sawan said in a Bloomberg TV interview. “I think that is going to be great to be able to avoid blackouts in Europe in winter.”
Read more: Shell CEO Says European Gas Storage May Surpass 90% Before Winter
In addition to high European stockpiles, the industrial sector in China hasn’t recovered “as fast as some had predicted coming out of Covid,” Sawan said. Still, he warned that “if we have a cold winter those stocks will very quickly be drawn down,” while also predicting a tighter LNG market in the medium term.
Much of Europe is also set to cool off following a deadly heat wave that gripped the southern portion of the region. Temperatures in Madrid and Rome are set to be near the historical average into early next week, while northern cities like London and Berlin are forecast to see colder weather than usual, according to Maxar Technologies Inc.
Benchmark Dutch front-month futures fell 2.6% to €28.52 a megawatt-hour by 12:51 p.m. in Amsterdam. UK prices also declined.
Even as Shell expressed optimism, Wintershall Dea AG Chief Executive Officer Mario Mehren warned that Europe “should not be complacent” after making it through a mild winter.
“We still have to observe what is going to happen over the next couple of months in terms of developments in the economies in Asia, in terms of what kind of winter we’re going to have,” he said after the German oil and gas company released earnings.
–With assistance from Laura Hurst, Priscila Azevedo Rocha and Olga Tanas.
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