2024 European Gas Prices Could Be Disappointing: WoodMac

European gas prices could be significantly lower than forecast for next summer, according to Wood Mackenzie, which cited lower demand from power plants and sufficient gas in storage.

According to Wood Mackenzie, Europe is in a good position with gas in storage heading into the 2023/2024 winter—more than is typical for this time of year. These high inventories are now mingling with lower demand for gas from power generation as nuclear power rises and inflationary-induced economic hardships crimp industrial and household consumption. And it might mean that Europe will escape another energy crisis.

This will have a “knock-on effect for prices next year,” according to Wood Mac, who added in a Wednesday report that gas in power was expected to decline 12% year-on-year next year. According to Wood Mackenzie, natural gas prices next summer could come in at just 20% of what is currently estimated.

Gas prices are already low compared to last year. Benchmark natural gas prices are a fifth of what they were this same time last year, with the Natural Gas EU Dutch TTF (EUR/MWh) currently trading at $37.09.

Of course, it’s possible that Europe could see a particularly brutal winter. But a mild winter had Morgan Stanley forecasting European gas prices at 15EU/MWh. In another scenario, the bank forecast that gas prices could spike to 100EU/MWh.

“The Norwegian maintenance schedule being extended could have had a serious impact if storage levels were not so high,” a research director for Wood Mackenzie said. “And while the strikes in Australia will ripple across the global LNG market, it is more likely they will be short-lived, limiting the implications on Asian and European market balances.”

But short term, gas prices could rise, as Norway’s giant Troll field halted production today, with flows remaining lower than initially planned through Saturday.

By Julianne Geiger for Oilprice.com

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