European gas extended gains for a third day as icy weather is forecast in western parts next week, with the potential for the cold to spread across the whole of the region.
(Bloomberg) — European gas extended gains for a third day as icy weather is forecast in western parts next week, with the potential for the cold to spread across the whole of the region.
Benchmark futures rose as much as 4% as traders weigh up the potential increase in demand from lower temperatures over the next two weeks. Paris will be more than 5 degrees Celsius below the seasonal average on Monday and Tuesday, according to Maxar Technologies Inc.
“Below normal temperatures are forecast to span from the mid-continent to southwest during this period,” Maxar said in its daily weather forecast on Friday.
Natural gas is set to post only its third weekly gain this year, as mostly mild weather has taken the pressure off prices.
Inventories in Europe are still well above usual levels for this time of the year, at 63% full, but the cold snap at the end of the heating season will increase pressure on storage and may potentially require higher injections over the summer season.
Despite the weekly gain, gas prices are still down more than 30% this year after rising to record levels last year, hurting industrial demand. Front-month gas futures rose 2% to €51.80 per megawatt-hour by 9:08 a.m. in Amsterdam, heading for a weekly gain of more than 5%.
Chemical giant BASF SE said it will cut 2,600 positions, about 2% of its global workforce, to reap cost savings.
Several industrial users have seen customers reducing their stocks, which has not yet allowed demand for gas to rebound despite lower prices, Goldman Sachs Group Inc. said in a report on Thursday. But that process will be complete by the end of this quarter, encouraging consumption of industrial products, and in turn gas, over the summer, the bank said.
–With assistance from Anna Shiryaevskaya.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.