European natural gas fell as an icy blast was forecast to ease next week, while high stockpiles helped the region guard against any supply disruptions.
(Bloomberg) — European natural gas fell as an icy blast was forecast to ease next week, while high stockpiles helped the region guard against any supply disruptions.
Benchmark futures fell as much as 4.3%, giving up an earlier increase. Gas demand could rise over the next few days as a wave of cold temperatures is expected to persist in northwest Europe for most of this week. Temperatures are likely to rebound to above seasonal norms next week, forecaster Maxar Technologies Inc. said.
The ongoing frigid weather has brought back some demand after a prolonged period of unusual warmth has gas storage sites about 78% full compared with the five-year average of 58% for the time of year. The reserves have kept Europe on track to ride out this winter without any major disruptions, and pushed gas prices to about half the levels of what they were during the previous cold snap in early December.
The stockpiles are helping counter the lowest Norwegian supplies in more than two months. Available capacity at several facilities in Europe’s biggest gas provider has been reduced by works and orders for shipments have fallen. High imports of liquefied natural gas are also helping ease concerns.
Wind power potential is seen also high for Germany and Italy next week, reducing the need for gas to generate power.
“Thanks to more comfortable wind generation, the increase in gas demand for power generation should be more moderate compared to early December,” EnergyScan, the analysis platform of Engie SA, said in a note. That would allow the European gas system to absorb the rise in residential demand “without too much tension.”
Russian pipeline gas transit via Ukraine declined last week and nominations suggest flows will remain curbed on Monday, though some analysts suggest this may be due to lower demand from buyers rather than supply issues.
Dutch front-month futures, the European benchmark, were 1.6% lower at €65.80 a megawatt-hour by 10:25 a.m. in Amsterdam. They increased 10% on Friday for the first weekly gain after five straight periods of declines. The UK equivalent contract fell 1.4% on Monday.
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