Gas prices falling due to abnormal warm weather in Europe
2023.01.03 10:15
Gas prices falling due to abnormal warm weather in Europe
Budrigannews.com – On Wednesday, the combination of warm weather in Europe and ample domestic supplies further eased the pressure on prices, causing U.S. natural gas futures to fall to a new 10-month low.
In the midst of unseasonably warm weather throughout much of Europe, Henry Hub futures fell below $4 per million British thermal units for the first time since February of last year. That makes it possible for suppliers to re-inject gas into storage, lowering the likelihood of a shortage and rationing this winter.
At the beginning of the year, data from the German network operator Bundesnetzagentur indicate that, as the weather decreased demand for heating, reserves in Germany’s gas storage facilities increased by more than 90%. The largest gas market in continental Europe is Germany. However, BNA continues to warn that underlying demand, adjusted for temperature variations, continues to exceed what it considers to be sustainable.
The most recent data, on the other hand, indicate that export demand for liquefied natural gas is the primary swing factor because U.S. inventories are exactly in line with historical averages over the past five years.
Germany now receives regular LNG imports from the United States and other countries. A brand-new LNG regasification terminal received its first cargo from the United States on Tuesday, and there are signs that spot market conditions may improve further in the coming weeks: Just before the holidays, the massive Freeport LNG export terminal on the Gulf of Mexico said that it expects to resume full operations in the second half of January. This comes after a fire in the summer cut off supplies to global markets just as European buyers were trying to find alternatives to Russian pipeline gas.
The U.S. market was trading at $4.038/mmBtu at 09:35 ET (14:35 GMT), still down 9.6% for the day. Benchmark futures for were down 1.2 percent to €76.25 per megawatt-hour and 2.7% to 181 pence per thermometer.
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