- European natural gas demand is now rising due to cold weather, with colder temperatures expected both this weekend and next.
- European natural gas prices have risen in recent days due to higher demand but were trading slightly lower on Friday morning.
- High inventory levels and a steady supply of LNG are keeping prices subdued despite rising demand.
Europe’s weaker natural gas demand in the autumn is now rising amid lower-than-usual temperatures in most areas and freezing weather expected to last until early December. The forecast for many countries, including Europe’s largest economy and natural gas user, Germany, has been updated to expect colder temperatures this weekend and next week, according to forecasts from Maxar Technologies cited by Bloomberg. On Friday, the front-month Dutch TTF Natural Gas Futures, the benchmark for Europe’s gas trading, were slightly down by 0.7% to $50.76 (46.50 euros) per megawatt-hour (MWh) as of 11:32 a.m. GMT. Gas prices rose in the previous days as heating demand increased. But the market isn’t as nervous as it was last year, mostly due to the still ample inventories at EU gas storage sites. As of November 22, EU storage was 98.4% full, according to data from Gas Infrastructure Europe. Europe’s gas prices started rising last week as the market began to focus on winter supply risks. Natural gas traders are already weighing the potential risks to European gas supply this winter, with weather the biggest unknown for traders, suppliers, and governments.
In early November, traders began withdrawing natural gas from Europe’s record-high inventories as the weather turned colder and heating demand rose. For now, record-high inventories and steady LNG inflows are giving Europe confidence that last year’s energy crisis will not repeat itself. However, the calmness in the market could turn into volatile turbulence again if fresh supply concerns emerge and if this winter is really cold in Europe and/or Asia. Governments and markets should be anything but complacent as risks of tighter markets and soaring prices remain, analysts and forecasters say. No one can predict how cold this winter in the northern hemisphere will be. Last winter was mercifully warmer than usual in Europe just as the continent was scrambling to import higher LNG volumes despite spiking prices to replace the lost Russian pipeline gas supply.
Source: oilprice.com