Europe’s benchmark natural gas prices extended losses on Monday and began a sixth week of declines amid comfortable inventories and tepid gas demand in Europe and Asia.
The front-month futures at the TTF hub, the benchmark for Europe’s gas trading, fell to $40 (36.25 euros) per megawatt-hour (MWh) as of 1:08 p.m. GMT on Monday. Prices have now halved since the beginning of the year after a milder winter, which left European gas inventories at the end of the 2022/2023 heating season well above the five-year average.
As of May 6, storage sites across the EU were 61.40% full, according to data from Gas Infrastructure Europe.
Spot LNG prices for delivery into north Asia in June have also slumped – to the lowest level in two years, as demand for the refilling of inventories in top buyers China, Japan, and South Korea remains weak.
The spot LNG price for June delivery averaged $11 per million British thermal units (MMBtu) last week, down by 4.3% from the prior week and the lowest spot price since June 2021, according to estimates from industry sources cited by Reuters.
Benchmark European natural gas prices hit a 21-month low last week, but Europe is not out of the woods yet for next winter’s supply.
Contrary to initial expectations, the 2022/2023 winter went surprisingly well, but the energy crisis isn’t over, and Europe is not out of the woods yet.
If demand for LNG in Asia, especially in China, picks up with the Chinese reopening, Europe may have to pay up for spot supply to beat competition from the Asian market ahead of next winter.
As fears of a gas crunch did not materialize this past winter, pulling European gas prices down, Europe shouldn’t count on another warmer-than-usual winter and less competition from Asia as it prepares for the 2023/2024 winter.
Source: https://oilprice.com/