Model of natural gas pipeline, EU and Russia flags, July 18, 2022. REUTERS/Dado Ruvic/Illustration

European Gas Rebounds as Colder Weather Spreads into April

European natural gas prices rebounded amid signs that colder-than-usual weather will extend into April, posing a potential pressure point for the region’s inventories.
Benchmark futures gained as much as 3.2% on Tuesday after slumping to the lowest since August 2021 on Monday.
Temperatures across northwest Europe and the Nordics are forecast to stay below seasonal norms until mid April, according to the month-ahead outlook of the European Centre for Medium-Range Weather Forecasts.
Full inventories have saved the region from the worst of the energy crisis this winter. But icy conditions this month have already increased withdrawals from gas storage sites, which will need to be refilled over the summer.
For now, storage facilities in Northwest Europe and Italy are expected to be 100% full by the end of September in average weather conditions, according to BloombergNEF. Still, steady flows of liquefied natural gas and containment of demand will continue to be important factors.
“LNG inflows could surpass the levels seen last summer to make up for lost Russian pipeline volumes, but continued gas demand destruction across residential and industrial sectors is also needed to refill storage before next winter,” according to BNEF’s gas summer outlook.
Competition for LNG is also intensifying amid re-emerging demand in Asia. US LNG exports are currently more profitable to send to Asia rather than Europe in April, according to BNEF.
Dutch front-month futures, Europe’s gas benchmark, were up 1.2% to €42.65 a megawatt-hour at 8:52 a.m. in Amsterdam.

About Parvin Faghfouri Azar

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