Low demand for natural gas has sent Europe’s benchmark gas prices towards a sixth consecutive weekly loss—the longest run of weekly losses since 2020.
The front-month futures at the TTF hub, the benchmark for Europe’s gas trading, fell by 3.7% to $36.80 (33.80 euros) per megawatt-hour (MWh) as of 12:27 p.m. GMT on Friday.
Lower power demand amid mild spring weather in most of Europe is depressing gas prices, while comfortable inventories of gas have not yet led to any rush for filling storage sites ahead of the next winter.
As of May 10, storage sites across the EU were 62.48% full, according to data from Gas Infrastructure Europe.
Lower gas prices have started to lead to increased coal-to-gas switching, but demand is nevertheless muted with low household consumption.
Europe’s benchmark gas prices have halved since the beginning of the year and are now just one-tenth of the record of over $326 (300 euros) per MWh from August 2022.
Spot LNG prices for delivery to North Asia in June have also plunged in recent weeks and were down for a third consecutive week on Friday, amid weak demand and high inventories in key Asian importers. Prices in Asia, at $10.50 per million British thermal units (MMBtu) this week, plunged by 4.5% from the previous week, according to estimates from industry sources cited by Reuters. The spot LNG prices in Asia are now at the lowest they have been since the end of May 2021.
Despite the current lull in natural gas demand and prices in Europe and Asia, governments and industry warn that Europe should not be complacent and that the energy crisis is not over yet.
The energy crisis is not over yet, and the situation with energy supply in Europe could deteriorate later this year, one of Germany’s top utility firms, E.On, said this week.
By Julianne Geiger for Oilprice.com
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