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European natural gas dropped with fuller-than-normal stockpiles countering higher demand, while an ongoing icy spell was forecast to end next week.
Benchmark futures fell as much as 11%, extending Monday’s decline. The frigid weather has raised gas usage for heating, but high storage levels and strong deliveries of liquefied natural gas are calming nerves and helping to keep prices in check.
The temperatures in northwest Europe are forecast to turn milder soon, with warmer weather expected through to the first week of February, according to forecaster Maxar Technologies Inc.
Strong LNG flows and healthy inventories are providing confidence Europe will end this winter without energy shortages. That’s helping counter lower flows from Russia and maintenance-related curbs in supplies from Norway. Gas prices fell to a 16-month low earlier this month, easing some concerns over inflation and the economy in the region.
“Gas markets remained relatively stable in the face of the colder weather,” analysts at Alfa Energy said in a weekly note. “With weather meant to return to mild in early February, not much price volatility is expected till then.”
Norway, Europe’s top gas provider, on Tuesday was recovering from some of the recent cuts caused by planned and unplanned outages, but total shipments from the country are still below its maximum capacity.
