European Gas Prices Drop as Weather Predicted to Turn Warmer

(Bloomberg) — Natural gas prices in Europe extended losses on Thursday as weather forecasts pointed to warmer temperatures, further delaying the start of the heating season in the region. 

Benchmark futures declined as much as 9.1%, following a slump of 8.2% on Wednesday. Warmer weather is expected in Scandinavia while above normal temperatures are seen for southwest Europe next week, Maxar said in a report.

Fears that a cold snap could tighten the market — which is already at risk with reduced flows from Russia — have increased volatility in recent weeks. Europe has almost full storage, which should serve as a buffer for the winter, but the market remains exposed to weather trends and any further reduction in supply. Gas prices are still more than three times above the average of the last five years.

Specialists and authorities keep urging the population to save gas. 

“We are in a better situation, but that doesn’t mean we should relax,” Catherine MacGregor, chief executive officer of Engie SA, said at the Bloomberg New Economy Forum in Singapore on Thursday. “On prices, one can expect continued volatility.”

Meanwhile, the European Union is continuing talks about ways to limit spikes in gas prices ahead of a meeting of energy ministers next week. The exact parameters to trigger a so-called market correction mechanism on the Dutch Title Transfer Facility would be fixed upfront to avoid lengthy decision-making procedures, according to a European Commission document shared with member states on Tuesday.

, Europe’s gas benchmark, fell to €104.6 a megawatt-hour at 8:20 a.m. in Amsterdam. 

©2022 Bloomberg L.P.

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