European natural gas prices declined for a second day as November kicked off with a windy weather outlook and optimism that the war in the Middle East might not impact global fuel flows.
Benchmark futures for December declined 0.5% after settling 9.5% lower the previous day. The continent is heading toward winter with full storage sites, and a mostly mild autumn hasn’t yet led traders to tap inventories.
Weaker demand now means more fuel will be available during colder months, and also in the event global events lead to disruptions in supply. Traders have been closely watching for possible repercussions from the Israel-Hamas war on gas shipments, with futures still trading higher than before the conflict erupted last month.
For now, disruptions have mainly affected exports of liquefied natural gas from Egypt, which in part depends on Israeli gas.
“There is a regional issue there, it hasn’t really become a global issue yet,” said Colin Parfitt, vice president for midstream at Chevron Corp., which has gas projects in Israel. Egypt accounted for about 4% of European LNG imports last year, and even less so far this year.
“The European market is actually quite well supplied with gas,” he said in an interview at the FT Energy Transition Summit in London. “The amount that is not coming from Egypt at the moment isn’t enough to really change it.”
Diplomatic efforts to prevent the war from spreading across the region continue, and Eurasia Group, a political risk consultancy, estimates that there is a 70% probability that it will remain contained.
Meanwhile, in the UK, wind contributed to more than half of the power generation mix earlier on Wednesday as Storm Ciaran approached. The storm is set to bring strong gusts and could pose a threat to power infrastructure as it intensifies into Thursday.
Day-ahead gas prices in Britain slumped as much as 17% in a second day of double-digit declines. Dutch front-month futures, Europe’s gas benchmark, settled 0.5% lower at €47.76 a megawatt-hour.
Tags Bloomberg News Agency Europe
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