European energy prices fell as warmer-than-usual temperatures curb demand for heating.
(Bloomberg) — European energy prices fell as warmer-than-usual temperatures curb demand for heating.
Benchmark natural gas futures declined as much as 6.5%, while power prices also moved lower. Mild weather has reduced pressure on the region’s gas inventories, with storage levels roughly steady over the past three weeks, at a time of year when countries normally tap their reserves.
That’s giving gas markets “a breather,” said Trevor Sikorski, head of natural gas, coal and carbon at Energy Aspects Ltd. in London. “We will probably end the winter with healthy storage levels, making it less difficult to balance the market for the forward winter season,” he said.
While concerns over supply shortages are ebbing, there’s still a risk that lower European gas prices may reduce LNG shipments to the continent — which Europe has become more reliant on since Russia curbed pipeline flows last year.
Lower European hub prices have helped make LNG affordable in Asia again. It’s already more profitable for US sellers to send cargoes to Asia in February and March.
Dutch front-month futures traded 5.1% lower at €70.50 a megawatt-hour by 12:02 p.m. in Amsterdam. The UK equivalent shed 5.4% to 173.66 pence a therm.
German power for next month fell 4.5% to €164 per megawatt-hour. Strong electricity generation from nuclear and renewables is also easing pressure on coal and gas markets, said Rystad Energy analyst Fabian Ronningen.
–With assistance from Vanessa Dezem and Josefine Fokuhl.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.
