British and Dutch wholesale gas prices fell on Friday morning due to robust imports of liquefied natural gas (LNG) and high levels of gas inventories, as well as expectations of slightly warmer weather by the end of next week.
The benchmark front-month contract at the Dutch TTF hub (TRNLTTFMc1) has fallen almost 17% so far this week and was on track for its eighth consecutive weekly drop.
On Friday by 0947 GMT, the contract was down 3.00 euros at 53.20 euros per megawatt hour (MWh), according to Refinitiv Eikon data.
The British within-day (TRGBNBPWKD) contract fell by 8.00 pence to 135.00 p/therm, while the day-ahead contract (TRGBNBPD1) was down 7.50 pence at 134.50 p/therm,
Analysts at Fitch Solutions said fundamentals in natural gas markets were relatively bearish.
“Recent cold weather has increased gas usage for heating in the region, but temperatures are expected to improve heading into February,” the analysts said.
“Inventory levels are seasonally high and LNG inflows remain healthy, offsetting lower volumes from Russia and, temporarily, Norway,” they added.
Temperatures across Europe will slowly rise from near normal to slightly above normal by the end of the next week, Refinitiv meteorologist Georg Mueller said.
Healthy storage levels have weighed on European gas prices in recent weeks and were almost 75% full, latest data from Gas Infrastructure Europe showed.
Speculation that the U.S. Freeport LNG export terminal could restart soon was also bearish, analysts said, as it would enable more LNG imports for Europe.
“These developments underpin our view that the commodity bounce more generally, and the European energy crisis specifically, are the result of super-charged cyclical, not structural factors,” said Norbert Rücker, head of economics and next generation research at investment bank Julius Baer.
“The 2022 commodity inflation is turning into a 2023 deflation,” he added.
In the European carbon market, the benchmark contract (CFI2Zc1) gained 0.32 euros to 89.68 euros a tonne.
Source: Reuters