Natural Gas Prices Sink in Europe on the Back of Milder Weather Conditions and Ample Inventories

Natural Gas prices in Europe have been sinking lower despite flying tensions in the Middle East, freezing temperatures in parts of Europe, and gas flow disruptions from Australia. According to the market specialist of ChemAnalyst, ongoing bearish sentiments in the Natural Gas market have been due to weakening gas demand due to milder weather forecasts and ample reservoirs in the northern hemisphere.

Despite the substantial risk of a proxy war between Israel and Hamas, European Natural Gas prices have continued to decrease. As of November 24, Natural Gas prices in Germany have been closed at 46.56 USD per MWh, FD Hamburg with a 5% decline.

Natural Gas prices might put an end to their continuous declining trend throughout November since European gas storage has been continuously withdrawing to serve heating demand. After a three-day row of freezing temperatures, European Natural Gas storage sites have been in doubt about whether they could fulfill peak demand.

The overall European Natural Gas storage has been averaged at 94.3% full at 111.88 billion cubic meters in the week ending November 24, 14% above five-year average storage. Countries like Belgium have reported 87.4% storage.

The number of cargoes from Australia’s east coast has decreased. According to exporters, this disruption could impact around 0.25 million tonnes of Natural Gas if the gas flows stop for the next two weeks. Moreover, gas flows have been redirected to serve Australia’s local market. However, Shell’s Prelude FLNG, which has an annual capacity of 3.6 million tonnes, is expected to restart operations at the start of December. The gas facility had been impacted by about one million tonnes of production after a maintenance shutdown started in late August.

Chevron’s LNG plant at Gorgon has resumed operations at its third liquefaction train in mid-November. The Natural Gas facility, having an annual capacity of 5.2 million tonnes, had been going through maintenance following an electrical accident last month. In the financial year 2023, over 3.5 million tonnes of total Natural Gas production have been affected in Australia due to liquefaction plant stoppages.

Meanwhile, the US dollar has been recovering from the weakness it has registered against the euro for the past few weeks. The weakening euro has been expected to impact the import prices of Natural Gas. Moreover, Germany, Europe’s largest gas-consuming country, has been projected to see below-zero temperatures through the first two weeks of December, despite soft industrial activity and healthy renewable energy production that will likely drive up the heating demand in this area.