Europe’s benchmark natural gas prices rose on Monday as demand increased during a cold snap in northwestern Europe and supply from Norway was expected to slip to a two-month low.
The Dutch TTF prices rose at the start of trade in Amsterdam before swinging to losses by mid-morning. Last week, prices rose for the first weekly gain in several weeks amid expectations of colder weather in the big gas-consuming countries in northwestern Europe.
Before that, Europe’s benchmark gas prices had slumped to the level last seen before the Russian invasion of Ukraine. Mild weather, ample volumes of gas in storage sites—well above the five-year average for this time of the year—and continued LNG imports have dragged gas prices lower in recent weeks.
But the cold snap expected in the UK, France, and Germany this week, combined with lower supply from Norway, is set to lift prices.
The EU day-ahead power prices were also headed higher as another cold spell hit the western parts of Europe at a time of low wind output, Ole Hansen, Head of Commodity Strategy at Saxo Bank, said on Monday. Day-ahead power prices in Germany, France, the UK, and Nordpool of the Scandinavian countries were all rising early on Monday.
Thanks to the milder weather at the start of the year, the situation with gas supply in Europe looks much better now compared to the bleak expectations before the heating season began.
While not ruling out a worsening of the current situation, the German Federal Network Agency, Bundesnetzagentur, said last week, “A gas deficit situation this winter is becoming increasingly unlikely.”
Still, the agency continues to call for energy and gas conservation.
Klaus Müller, the president of the agency, said, “Even if we can be optimistic about avoiding a gas shortage for the winter of 22/23, we have to start thinking about 23/24 now. To do this, we must continue to save gas, become more energy-efficient, expand renewables, connect LNG terminals and fill storage facilities.”
By Tsvetana Paraskova for Oilprice.com
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