Europe's benchmark gas prices extended losses early on Wednesday, falling by 3% in early trading in Amsterdam for a 25% decline so far this month, as inventories are high and milder weather is expected to return.
Shortly after trade opened in the morning in Amsterdam, the Dutch TTF fell by 3% at $61 (56.50 euros) per megawatt hour (MWh), for a third consecutive day of losses despite the current cold snap in northwestern Europe.
Weather forecasts suggest that the temperatures will rise in the coming days in the largest gas-consuming nations in Europe. Milder temperatures are coming next week in northwest Europe after the current cold snap. The warmer weather will persist through the first week of February, per forecasts from Maxar Technologies quoted by Bloomberg.
In addition, EU gas inventories are still unusually high for this time of the year - at 77% full across the EU and well above the five-year average for the winter heating season. The high volumes of gas in storage and the constant influx of LNG cargoes are easing supply concerns in the absence of most of the Russian pipeline gas.
Of course, milder weather so far this winter, especially at the end of December and the start of 2023, has helped a lot.
"We can afford to be more optimistic," Deutsche Bank AG analysts wrote in a note this week, as carried by Bloomberg.
"Gas storage is up and gas prices are down. Inflation is falling and uncertainty is declining," Deutsche Bank said.
Meanwhile in Germany, Europe's biggest economy, the German Federal Network Agency, Bundesnetzagentur, said on Tuesday that it "views the situation as less tense than at the beginning of the winter."
"A gas deficit situation this winter is becoming increasingly unlikely," although a worsening of the situation can still not be ruled out, the agency said.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More