European natural gas prices were having a nervous trading session early on Tuesday as traders weighed higher heating demand amid colder weather with still nearly full EU inventories.
The front-month Dutch TTF Natural Gas Futures, the benchmark for Europe's gas trading, were down by 1.7% to $49.30 (45 euros) per megawatt-hour (MWh) as of 12:54 p.m. in Amsterdam.
Prices had gained nearly 2% on Monday as weather forecasts for Europe pointed to a cold snap this week with temperatures well below the average for this time of year.
Most of Europe faces colder than usual weather from now until the beginning of December, per weather forecaster Maxar Technologies quoted by Bloomberg.
The below-average temperatures will raise demand for heating and natural gas.
But the market isn't as nervous as it was last year, mostly due to the still ample inventories at EU gas storage sites. As of November 19, EU storage was 99% full, according to data from Gas Infrastructure Europe.
Europe's gas prices started rising last week as the market began to focus on winter supply risks.
Natural gas traders are already weighing the potential risks to European gas supply this winter, with weather the biggest unknown for traders, suppliers, and governments.
In early November, traders began withdrawing natural gas from Europe's record-high inventories as the weather turned colder and heating demand rose.
The LNG market seems calmer than usual for November when heating demand is typically rising in both Europe and Asia. Yet, no one can predict how cold this winter in the northern hemisphere will be. Last winter was mercifully warmer than usual in Europe just as the continent was scrambling to import higher LNG volumes despite spiking prices to replace the lost Russian pipeline gas supply.
The seizure of a cargo ship in the Red Sea by the Iran-aligned Houthi rebels of Yemen this weekend has also added some bullishness on the energy markets which haven't fully discounted yet an escalation of the conflict in the Middle East.
By Tsvetana Paraskova for Oilprice.com
Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More
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