Europe’s natural gas prices dropped on Monday to the lowest level in three months as LNG imports climbed while weather forecasts pointed to a milder-than-expected autumn.
Natural gas prices at the Dutch TTF hub, Europe’s benchmark, were down by nearly 8% in early trade in Amsterdam on Monday. Prices hit an intra-day low of $140 (144 euros) per megawatt-hour (MWh), the lowest European benchmark gas price since July 1.
Strong imports of liquefied natural gas (LNG) into Europe and milder weather over the next week or two are the two key reasons for the dip in gas prices at the beginning of this week. Higher nuclear power generation from France compared to the previous months is also helping electricity supply across the continent, thus curbing some gas demand for power.
Imports of LNG cargoes into northwest Europe have reached their highest level for this time of the year since 2016, per data compiled by Bloomberg. According to Reuters, nine LNG tankers are currently expected to arrive in the UK alone by the end of the month.
The three-month low gas prices in Europe today are “driven by strong LNG arrivals, mild autumn weather and demand destruction,” Ole Hansen, Head of Commodity Strategy at Saxo Bank, said. Russia’s ability to shock the market has been much reduced, with flows down 78% year over year, Hansen added.
Weather will be mild in most of Europe over the next two weeks, models suggest, which would also alleviate upward pressure on gas demand for heating and electricity.
Meanwhile, EU leaders have yet to agree on some form of capping gas prices after failing to do so at a summit in Prague last week. The EU is negotiating “a corridor for decent prices” with reliable suppliers, or for example, “looking at how to limit prices in the gas market overall,” European Commission President Ursula von der Leyen said at the end of last week.
“Gas storage in the EU is now at more than 90%,” the European Commission said this weekend. “Good news: we have already reduced our gas consumption by about 10% but more can still be done,” the Commission says.
By Tsvetana Paraskova for Oilprice.com