European natural gas prices sink to 18-month low
Europe’s benchmark natural gas price fell on Friday to the lowest level in 18 months as concerns about a gas crisis this winter continue to recede amid mild weather and above-average inventories across the continent.
On Friday morning in Amsterdam, the front-month futures at the TTF hub were down by 6% and fell below the threshold of 50 euros ($53) per megawatt-hour (MWh) for the first time since August 2021.
Prices are now more than 85% down from the record high of 300 euros ($318) per MWh from August 2022, and down by around 35% so far this year alone.
“EU gas trades below €50/MWh for the first time in 17 months, and equally important, the winter 23/24 and 24/25 continues to soften as well, both trading below €60,” Ole Hansen, Head of Commodity Strategy at Saxo Bank, said on Friday, commenting on the Friday slide in prices.
Weather in many parts of Europe is milder, and inventory levels are above the five-year average for this time of the year.
But the falling price in Europe could incentivize more demand in the industrial sector, as well as more demand in Asia, which would compete for spot LNG supply with Europe.
Europe looks to be out of the woods this winter, but next winter could be more difficult. Analysts warn that further downside to European gas prices is limited.
The race to ensure supply for next winter hasn’t even started in earnest yet. Prices are set to hold higher than before the Russian invasion of Ukraine through the summer as Europe will face stiffer competition from Asia for LNG supply. Last year, Asia – including China – saw LNG imports decline amid high spot prices and a slowdown in the Chinese economy. With China’s reopening, however, demand for gas and LNG is set to rebound, increasing the competition between Asia and Europe for spot supply, analysts say.
