European natural gas prices fell to the lowest level since September 2021 as confidence grows for energy stability in the region through the remainder of winter.
(Bloomberg) — European natural gas prices fell to the lowest level since September 2021 as confidence grows for energy stability in the region through the remainder of winter.
Benchmark futures slid as much as 4.8% to €51.39 per megawatt-hour. Sweden downgraded its risk of power cuts to “low” in a sign that the worst of the region’s supply crisis has passed — at least for now. Power prices also declined.
The slump illustrates a remarkable turn of events for Europe, which just six months ago saw gas prices above €300 as countries braced for winter rationing and blackouts. That hasn’t occurred, due to mild weather and steady imports of liquefied natural gas to make up for lost pipeline flows from Russia. Inventories are now much higher than usual for the time of year.
In addition, several reactors are now back in service in France, which faced extended outages in its nuclear fleet. The return of Germany’s Emsland reactor before its final closure in April, along with a unit in Slovakia, has also been beneficial, according to Swiss trader Axpo Solutions AG.
Separately, the Freeport LNG plant in Texas has resumed shipments from tanks, a milestone toward a full restart, which is yet to follow. In Norway, an unplanned outage at the Troll field ended, boosting supply from Europe’s key gas provider.
Front-month gas futures, Europe’s benchmark, traded 3.9% lower by 1:28 p.m. in Amsterdam. Prompt prices also fell as wind generation in the UK, France and Germany is expected to increase from Tuesday through Friday. Milder weather is forecast in northwest Europe by the end of the week.
Power prices followed gas lower across Europe, with the benchmark German year-ahead contract falling 3.8% to €158.30 per megawatt-hour. Cheaper fuel to produce power, along with warmer weather, is set to ease the strain on power stations and grids in the region.
–With assistance from Asad Zulfiqar and Todd Gillespie.
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