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European natural gas rose as forecasts showed the weather turning cooler than previously estimated next week.
Futures for delivery in March rose as much as 11%. Some weather models are showing temperatures dropping again after a warm spell, potentially boosting demand for gas and forcing more withdrawals from fuller-than-normal storage sites. Maxar Technologies Inc. sees cooler conditions in northern and central Europe, but still close to average levels for the time of year.
Spell of cold weather are keeping the energy crisis alive, even though much of the sting has gone out. Gas prices are heading for a second monthly decline, and confidence is mounting that inflation has passed its peak while a recession could be averted. But the market is still sensitive to any signs of increase in consumption and the weather has been the main driver.
“Lower demand for gas, with plenty in storage, had reduced risk until this point,” said Tim Partridge, head of energy trading at Zenergi Group. But “pockets” of colder weather, together with some outages recently, are still supporting near-term prices, he said.
