European natural gas prices rebounded as traders weighed the risk of demand picking up in some industries following a recent slump.
(Bloomberg) — European natural gas prices rebounded as traders weighed the risk of demand picking up in some industries following a recent slump.
Benchmark futures jumped as much as 11% on Friday, erasing an earlier decline. While storage levels in the region are far above seasonal norms and imports of liquefied natural gas continue, a current cold spell is raising consumption. Traders are also closely watching competition with Asia for the fuel as global market remains tight.
Prices earlier were poised for a sixth weekly loss — the longest such stretch since February 2020. Mild weather this winter has helped to keep stockpiles high, leading some politicians to suggest the worst of Europe’s energy crisis is over.
However, there are concerns fuel usage might start to recover after prices slumped to a 16-month low earlier this week.
“While the healthy storage and ongoing plentiful LNG situation is pushing the market lower, we are hitting resistance from potential industrial demand kicking back-in,” said Tom Marzec-Manser, head of gas analytics at ICIS in London. He noted that ammonia production in Europe is now profitable again, which could lead to greater consumption.
Separately, supplies from Norway remain capped amid maintenance. Russia’s remaining shipments — sent via Ukraine — have also declined this week, though some analysts suggest this may be due to lower demand from buyers rather than supply issues.
Nuclear outages in France are adding to market concerns, with capacity cuts at another unit of Electricite de France SA extended by six weeks on Friday.
“While the outlook has certainly improved, we still expect gas price volatility in the coming months,” analysts at JPMorgan Chase & Co. said in a note Friday. “The market should not become too complacent given the warm weather so far this winter.”
Europe’s Energy Crisis Is Far From Over But Pressure Set to Ease
Dutch front-month futures, Europe’s gas benchmark, traded 10% higher at €67 a megawatt-hour by 5:12 p.m. in Amsterdam, heading for the first weekly advance since early December. UK-equivalent futures jumped 11%. German front-month power was up 2.4%.
–With assistance from Todd Gillespie.
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