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European natural gas prices fell for a fifth day as temperatures are forecast to stay mild into the new year while supplies remain plentiful.
Benchmark futures declined as much as 7%, after closing at the lowest level since mid-June on Wednesday. Prices have been sliding over the last two weeks with mild and windy weather curbing demand for gas. Industrial consumption, already curbed by high prices earlier in the year, typically eases during the holiday season.
Liquefied natural gas supplies also remain strong, with a flotilla of tankers headed for northwest Europe, and Germany starting two new import terminals. The market situation is easing some concerns for policy makers after a tough year in which energy prices hammered economies and helped drive inflation to the highest in decades.
“With no major change in mild and windy weather forecasts for the end-of-year break and the continuation of strong LNG imports, European gas prices are likely to remain under downward pressure today,” EnergyScan, the analysis platform of Engie SA, said in a daily note.
Still, traders are watching the market for any signs of shifting gas flows as the difference in prices between Europe and Asia remains narrow. Currently, US LNG exporters will find it equally profitable to sell to the two regions in February, while they’re more lucrative to Europe in March, according to BloombergNEF.
In a sign the market may tighten in Asia, Shell Plc temporarily suspended production at the Prelude floating LNG facility off the west coast of Australia after a fire.
Dutch front-month futures, Europe’s gas benchmark, were 5.1% lower at €92.75 a megawatt-hour at 10:12 a.m. in Amsterdam. The next key support level for the contract is below €80, EnergyScan said. The UK equivalent fell 5.6% on Thursday.
