European natural gas rose from a 23-month low near €30 in a sign that traders see that level as a floor for prices for now, with demand remaining stubbornly low.
(Bloomberg) — European natural gas rose from a 23-month low near €30 in a sign that traders see that level as a floor for prices for now, with demand remaining stubbornly low.
Benchmark futures climbed as much as 3.4% after slumping to the lowest since June 2021 on Thursday. Prices still posted a seventh straight week of declines, the longest streak in six years, driven by stable supply, mild weather and stronger renewable power generation.
The gain on Friday shows that there may be room for a push higher when summer temperatures boost demand for cooling. Sunnier and warmer weather is expected over most of Germany this weekend, while below-average temperatures are forecast across Spain, meteorologist Maxar Technologies Inc. said. Last summer, Europe faced abnormal heat and drought that affected hydro power and some nuclear plants, bolstering the use of gas.
Weather-driven surges aside, the relative strength index — a technical indicator for how rapidly prices advance or drop — showed futures were oversold in recent days and a move higher was on the cards.
Longer-term drivers, however, are weak, according to Energy Aspects Ltd. Industrial demand remains lackluster despite cheaper gas and strong LNG availability.
Inventories in Europe are about 65% full, compared with a 10-year average of 44% for this time of year. Gas has been injected into storage sites every day over the past month, and Energy Aspects expects they will be full early this summer. That would put downward pressure on prices.
Dutch front-month gas, Europe’s benchmark, settled 1.3% higher at €30.18 per megawatt-hour. The UK equivalent contract rose 0.9% after sliding more than 7% on Thursday.
–With assistance from Anna Shiryaevskaya.
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