Wholesale gas prices fall 3.5% despite cold snap setting in this week
And The 3 Fell On European As Fell Much 5% Monday As Uk Prices Continental 4 Wholesale In 5% Prices
European wholesale gas prices fell by 3.5% as huge storage levels across the continent boosted confidence for supplies despite the onset of a testing cold snap this week.
Continental European prices fell 3.5% and wholesale prices in the UK fell as much as 4.5% on Monday amid increasing confidence the continent will have a record volume of gas still in storage, resulting in downward pressure on prices.
Monday's prices were trading at €43.20 per megawatt hour, their lowest since January last year. Prices are down sharply from €189 when the winter season started in October and a peak of €339 last August.
Gas storage in the EU and the UK was almost 61% full, according to data from Gas Infrastructure Europe, and far above the 39% seasonal average for the last decade.
While the UK and northern part of mainland Europe is set to see unusually low temperatures in the coming days, the market seems to be shrugging off a potential increase in gas consumption — at least for now.
That’s largely due to higher-than-usual fuel stock levels in the EU. Imports of liquefied natural gas also remain strong as the US is shipping a record amount of the fuel with the restart of the Freeport plant in Texas.
The European Centre for Medium-Range Weather Forecasts predicts temperatures will be slightly colder than average for the seven days up to March 13, but after that warmer through the end of March.
Futures prices are sliding to arrest the swelling surplus by encouraging more consumption from industry and power generators and re-routing liquefied natural gas tankers to alternative markets in South and East Asia.
“With a little under a month left of winter, the upside demand risk from a prolonged spell of cold weather is diminishing,” Timera Energy said in a research note.
“Europe looks set to end winter with over 50% of gas in store even if March temperatures outturn below normal,” it said.
Still, there’s a chance that gas networks in the region could be pressured in the coming days.
The UK’s forecast gas demand has risen about 4% since last Friday, data from National Grid show.
Yet, the country’s exports to mainland Europe were halted over the weekend due to a pipeline incident, meaning more fuel can remain in the UK — even as some facilities that deliver gas to the country’s market are affected by outages.
Europe’s consumption has been reduced through a combination of industrial closures, public information campaigns to reduce energy use, and milder than usual weather, coupled with brisk imports of LNG.
So far this winter however the number of heating degree days at Frankfurt in Germany, a proxy for the Northwest Europe macro region, has been around 8% lower than the ten-year average.
Strikes at Electricite de France’s hydropower units added a small strain to that country’s system.
About 460 megawatts of capacity were unavailable on Monday morning, the grid operator said in a notice.
The restriction on production is likely to continue through Tuesday.
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