Mild Weather Drives Gas Prices Down In Europe
The benchmark natural gas prices in Europe continued to fall on Monday, for a third trading day in a row, as forecasts of milder weather this week and sufficient LNG deliveries calmed the market.
The benchmark price for Europe at the Dutch Title Transfer Facility (TTF) fell by nearly 5 percent early on Monday, while the UK day-ahead wholesale gas price also dropped, by 2.6 percent.
Expectations of milder weather in many parts of Europe this week, as well as stable pipeline gas supply from Russia and more LNG cargoes set to arrive in the region, have dragged down the key natural gas prices in recent days.
“Mild weather is the main reason behind the declines today,” one gas trader told Reuters on Monday.
Russian natural gas flows via the Yamal-Europe pipeline via Belarus to Poland and Germany have been stable over the weekend, according to data from German network operator Gascade cited by Reuters.
Despite the current decline in Europe’s natural gas prices, the fundamentals for the winter remain bullish, analysts say.
The lowest volumes of gas in storage in Europe in a decade haven’t changed and could come under pressure when the weather turns colder.
“The European gas system is at risk of shortage this winter if Russian flows fail to ramp-up beyond long-term contracts,” Engie’s EnergyScan service said in a report quoted by Reuters.
Russia continues to abide by its obligations under its contracts with customers, but its gas giant Gazprom isn’t sending too much gas above those contractual volumes.
Russian supply is still “a far cry from what would have been needed to prevent storages from dropping further,” Axpo Solutions AG said, as carried by Bloomberg.
Meanwhile, the U.S. benchmark at Henry Hub collapsed by over 9% to below $4 per million British thermal units (MMBtu) for the first time since mid-August on expectations of warmer than usual weather in the next few weeks.