Europe’s benchmark natural gas prices fell by nearly 6% mid-day in Amsterdam on Wednesday, erasing gains from earlier in the day, as the heatwave across southern Europe started to abate and gas inventories are high with storage sites on track to be full well in advance of EU targets.
The front-month futures at the TTF hub, the benchmark for Europe’s gas trading, traded at $34 (30.75 euros) per megawatt-hour (MWh) as of 12:08 p.m. GMT on Wednesday, down by 5.8% on the day.
Early on Wednesday, prices rallied by 5% after news broke that maintenance works at the Dvalin gas field offshore Norway would be extended to the end of this week, while works are planned at other Norwegian facilities next month. Earlier today, prices hit $37.60 (34 euros) per MWh, but fell as the day progressed.
The record high temperatures in Italy are starting to ease, reducing demand for gas-powered electricity generation. Demand from industry is also lower compared to previous years, due to the slowdown in major economies in Europe.
In addition, EU gas storage levels are high—much higher than the five-year average and the levels from this time last year, easing concerns about Europe’s gas supply.
The EU gas storage sites were 84% full as of July 24, according to data from Gas Infrastructure Europe.
“Further upside momentum has been dampened by continuously high underground gas storage levels in Europe,” Masanori Odaka, a senior analyst at Rystad Energy, wrote in an emailed note cited by Bloomberg.
The EU has set a target to reach 90% full gas storage by November 1, 2023. Not only will it hit that target ahead of schedule, but it could also fill its storage tanks to 100% by early September, according to Morgan Stanley.
In the near term, Europe’s gas prices could rise due to the planned maintenance offshore Norway in August, which will include the massive Troll gas field, the Vesterled pipeline, and the Kollsnes gas processing plant.
By Charles Kennedy for Oilprice.com
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