EUROPE GAS-European benchmark falls to its lowest level in 18 months on the back of a milder outlook and peace talks with Ukraine
On Monday, the European benchmark contract fell under 30 euros for first time since May 20, 2024. This was due to forecasts of a warmer-than-normal climate in the coming two weeks as well as ongoing diplomatic efforts aimed at ending the war in Ukraine.
LSEG data shows that the benchmark Dutch front-month contract was 29.25 euros per Megawatt Hour (MWh) or $9.88/mmBtu at 0945 GMT. This is a decrease of 0.99 Euro.
This is the lowest price in 20 years.
The British gas day-ahead price was lower by 2.00 pence at 77.00 cents per therm.
Georg Mueller, LSEG's meteorologist, said that next week and most likely the week following will be warmer than usual, with windy conditions and occasional rain, especially in our western and northern areas.
LSEG data shows that the gas demand for heating in northwest Europe is expected to decrease from 4,721 gigawatt-hours (GWh)/day on Monday to 3,788 GWh/day during working days next week.
The ongoing talks between the United States, Ukraine and Russia over a revised strategy to end the conflict with Russia also weighs on the wider commodity prices.
Ole Hvalbye is a commodities analyst with SEB Research. He said that it's hard to predict the outcome because previous attempts have failed.
He added, "I don't think that the market will see more Russian gas in Europe for a very long time."
Hvalbye stated that while other gas supplies to Europe have been good, there is still a limit on the downside, as current prices are attractive for industrial customers and European gas storage levels are falling.
Gas Infrastructure Europe's data shows that EU gas storage sites are currently 79.1% filled, down two points in the last week due to cold weather demand. This compares to 88.3% a year ago.
The benchmark carbon contract in Europe was down 0.50 euros at 79.91 euro per metric ton. (Reporting and editing by Krishna Chandra Eluri in Oslo)
(source: Reuters)
