The price of gas contracts in Europe remains at a 18-month low due to peace talks, mild temperatures and abundant LNG
Dutch and British gas futures traded slightly lower on Wednesday. They were near their lowest levels in 18 months, due to the prospects of warmer weather for early December, the ongoing efforts to end Ukraine's war, and the abundance of liquefied gas.
Analysts said that the further downside is limited as long as the gas storage levels continue to drop and that LNG exports to Europe may be slowed.
LSEG data shows that the benchmark Dutch front-month contract was 29.20 euros per Megawatt Hour, or $9.97/mmBtu at 0928 GMT. This is a decrease of 0.22 euros.
Tuesday's intraday low was 29 euros/MWh, the lowest since May 2024.
The Dutch contract for the day-ahead price of gas was lower by 0.32 euros, at 29.45 Euros/MWh. In comparison, the British contract for day-ahead prices was 1.70 pence less at 75.60 Pence per therm.
Analysts at ING Research stated that "Peace Talks will Put Pressure on the Market, While Weather Forecasts Point to Milder-than-usual Conditions in Early December."
The Kremlin announced that Steve Witkoff, the envoy of U.S. president Donald Trump, and other U.S. key officials would travel to Moscow for discussions on a potential peace plan for Ukraine next week.
An aide to the Kremlin said that the plan was not discussed during the meetings between Russian, Ukrainian and U.S. representatives in Abu Dhabi on Wednesday.
Analysts at ING said that the weakness of the European market had spread to Asia's Japan-Korea Marker, a key indicator for competition between these two regions in terms of LNG cargoes.
They said that if this trend continues we may see a slowdown in the LNG flow into Europe.
Arne Lohmann-Rasmussen is the chief analyst of Global Risk Management. He said that LNG imports to Europe are plentiful and speculative traders who take short positions have also contributed to the lower prices.
He added that the latest report due today on these speculative position is expected to show an increase in short positions from last week, and could add more downward pressure today.
Dzmitry Dzhalevich, analyst at LSEG, stated that tightening up storage levels has meanwhile slowed down the price decline.
Gas Infrastructure Europe's data shows that EU gas storage sites are currently 78.14% full. This is down three points in the last week due to cold weather demand, but still higher than 87.7% one year ago.
The benchmark contract on the European carbon markets was down by 0.03 euros, at 81.84 euro per metric ton. Nora Buli, reporting from Oslo; Jan Harvey, editing)
(source: Reuters)
