European natural gas resumed declines as traders focused on sluggish demand, high renewables output and concerns over China’s economic recovery.
(Bloomberg) — European natural gas resumed declines as traders focused on sluggish demand, high renewables output and concerns over China’s economic recovery.
Futures for July delivery fell as much as 2.7%. China’s weakness is keeping energy consumption muted that is leaving an abundance of liquefied natural gas in the global market. It is taking away any supply risk for Europe at a time when demand in the continent is also wobbling.
The region has sharply turned around from the depths of the energy crisis following a mild winter. Gas prices are down over 65% this year, and there’s little sign the slide will end anytime soon. Inventories are far fuller than normal, Germany is generating record amounts of solar power that’s keeping gas use low and industrial demand is slow.
Gas was lower on Wednesday “partly driven by weak economic signals,” said Ole Sloth Hansen, head of commodities strategy at Saxo Bank A/S. “Most recently the China manufacturing data pointing to weakness and, with that, potentially weaker competition for LNG.”
Manufacturing activity in the Asian nation continued to slump after a burst of consumer activity early in the year. It’s adding to investors turning more bearish about the growth outlook.
Read more: China’s Factory Slump Worsens as Fears Mount Over Recovery
Dutch gas for July, a European benchmark, was 0.9% lower at €25.02 a megawatt-hour by 9:35 a.m. in Amsterdam. The UK equivalent contract fell 0.5%.
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