Gas prices slide 15% in past week as crisis eases
The Lng Reduced Stockpiles Seasonal Have Prices Ample Kept Have Slumped Continent's Averages, Fuel Last Peaks Flows From Demand Year’s And Far Gas Above And
European wholesale gas prices headed for a weekly loss on forecasts for milder weather and large stockpiles.
Prices from February through the summer months rose slightly in the latest session to €55.75 per megawatt hour, but down 15% in the past week, and compared with €77 in early December.
Warmer temperatures next week likely to ease demand and pressure on gas inventories.
Mostly mild weather this winter and efforts to save energy are helping ease a historic energy crisis in Europe after a tumultuous period last year.
“Europe won’t be running out of gas anytime soon,” Bloomberg NEF analysts Stefan Ulrich and Arun Toora said in a research note.
“Europe is currently on track to procure more than enough gas to fully replenish its stocks by the end of September, with the uncertainties ahead seemingly manageable in scale,” the analysts said.
Reduced demand and ample LNG flows have kept the continent's gas stockpiles far above seasonal averages, and fuel prices have slumped from last year’s peaks, with inflation starting to ease and fears of a recession receding.
In addition, prospects are mounting that a long-shut export terminal in the US might resume shipments later this quarter.
Freeport LNG, which recently finished repairs after an explosion last summer, received approval from regulators for some some operations. Many analysts expect the plant — that previously accounted for about 15% of US liquefied natural gas shipments — could restart exports around March.
Meanwhile, Intercontinental Exchange, or ICE, will open a parallel natural gas market in London to help traders cope with any potential disruptions caused by the European Union’s new rules to prevent extreme price swings.
It will offer the so-called Dutch Title Transfer Facility futures and options on the ICE Futures Europe exchange from February 20, five days after the EU’s temporary price cap takes effect, according to a statement.
The London market won’t be subject to the cap. The bourse’s Netherlands-based ICE Endex hub will also change its rulebook to comply with the EU's regulation.
The EU last month reached a deal to cap gas prices at €180, ending months of political wrangling over whether to intervene in a region-wide energy crisis that has contributed to historic inflation.
The cap, which will be in place for a year, requires several triggers before it can take effect. ICE — which hosts the benchmark Dutch Title Transfer gas contract in Amsterdam — previously said it was concerned a cap could have a potential destabilising effect on the market.
“ICE’s purpose is to create markets to allow our customers to manage their risk and we have a duty to our customers to provide solutions to the problems they face,” Trabue Bland, ICE’s senior vice president for futures exchanges, said in the statement.
The London market will act as an “insurance option for customers” if the EU rules prevent them from trading and adequately managing exposure to risk.
• Bloomberg and Irish Examiner