AlwaysFree: Europe Gas Heads For Weekly Loss As Weather Counters Norway Cuts

• Traders weigh next week’s demand ease against supply outages
• Benchmark futures head for biggest weekly loss since December

According to Bloomberg article published on January 27, 2023, European natural gas prices headed for a weekly loss as milder weather forecasts countered lower supplies from Norway.

Benchmark futures swung between small gains and losses on Friday after Norway’s network manager announced unplanned outages at a processing plant. Earlier in the day, the contract had lost as much as 4.9%, after closing at the lowest level in more than 16 months on Thursday.

Prices are still pushing toward their biggest weekly loss since December, with warmer temperatures next week likely to ease demand and pressure on gas inventories.

In addition, prospects are mounting that a long-shut export terminal in the US might resume shipments later this quarter. Freeport LNG, which recently finished repairs after an explosion last summer, received approval from regulators for some some operations. Many analysts expect the plant — that previously accounted for about 15% of US liquefied natural gas shipments — could restart exports around March.

Mostly mild weather this winter and efforts to save energy are helping ease a historic energy crisis in Europe after a tumultuous period last year. Reduced demand and ample LNG flows have kept the region’s gas stockpiles far above seasonal averages, and fuel prices have slumped from last year’s peaks, with inflation starting to ease and fears of a recession receding. 

“Europe won’t be running out of gas anytime soon,” BloombergNEF analysts Stefan Ulrich and Arun Toora said in a note. “Europe is currently on track to procure more than enough gas to fully replenish its stocks by the end of September, with the uncertainties ahead seemingly manageable in scale.”

Dutch front-month gas, Europe’s benchmark, traded 2% higher at €55.9 a megawatt-hour by 5:32 p.m. in Amsterdam, but still headed for a weekly decline of about 16%. The UK equivalent contract was up 1.1%.

After the recent price slump, traders are watching for any signs of shifting LNG flows as Europe competes with Asia for the vital fuel. Lower energy costs also create the potential for rebounding consumption.

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