European benchmark natural gas prices slipped below the key threshold of 30 euros per megawatt-hour (MWh) on Monday, for the first time in a year and a half, amid strong LNG flows, milder temperatures, and negotiations about the end of the war in Ukraine.
Dutch TTF Natural Gas Futures, the benchmark for Europe’s gas trading, fell by 1.3% at $34.36 (29.795 euros) per megawatt-hour (MWh) at 9 a.m. in Amsterdam on Monday. That’s the first time the benchmark futures prices have slipped below 30 euros per MWh since May 2024.
European natural gas prices have traded in a very narrow range of about $36.90 (32 euros) per MWh for months.
The move lower of the past week has been accelerated by the discussions about the U.S. peace plan for Ukraine, forecasts of milder temperatures in northwest Europe in the weeks ahead, and continued strong LNG flows into Europe amid tepid demand in Asia.
Gas and energy traders are eyeing the talks on the U.S. peace plan for Ukraine, which could lead to easing of some of the sanctions on Russian energy exports. That’s of course if the plan goes through, which is far from certain.
The U.S. and Ukraine held on Sunday in Geneva what the two sides described as “highly productive” talks and agreed to continue intensive work on a “refined” peace plan.
The EU’s gas storage sites were 79% full as of November 22, per data from Gas Infrastructure Europe, as countries have started to draw down supply for the winter heating season.
Near-term signals for gas prices appear bearish, with milder temperatures in the coming days in northwest Europe and the steady LNG flows, especially from the United States.
Despite Europe’s gas inventories now falling and at levels lower compared to this time last year, rising LNG flows are easing concerns about a shortage of supply. However, as in any winter, Europe’s gas futures prices will be very sensitive to weather patterns, geopolitical events, and supply shocks.
By Tsvetana Paraskova for Oilprice.com
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