European Gas Rebounds With Focus on Weather, Supply Risks

Nov 14, 2022 by Bloomberg
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European natural gas advanced, rebounding from a recent slump, as temperatures are set to turn colder in parts of the continent after a period of abnormal warmth.�

Benchmark Dutch futures rose as much as 6.6% after losing 15% last week. It should get cooler in Germany and parts of Northern Europe by the coming weekend and into early next week, according to forecaster Maxar Technologies LLC. That may force people to start using heaters after a prolonged delay thanks to what had been unseasonably high temperatures.�

EUROPE WEATHER: Short-Lived Cold Snap Forecast for Berlin

In addition, outages in Norway are curbing supplies, with the Asgard field halting operations due to �process problems,� according to network manager Gassco. The field�s platform will remain shut for the time being after a fire in a transformer on Sunday, the operator Equinor ASA said.�


Dutch front-month gas, Europe�s benchmark, traded 6.3% higher at �104 a megawatt-hour by 10:10 a.m. in Amsterdam. The UK equivalent contract gained 8.1%.

�This appears as a technical rebound in a downtrend, so it should be limited,� according to EnergyScan, the analysis platform of Engie SA.

Muted Demand

Prices remain under pressure after the mild weather in the past few weeks delayed an increase in Europe�s heating demand. The continent also has a greater probability of significantly higher temperatures than normal this winter, according to the European Union�s Copernicus Climate Change Service.�

Together with ample supplies of liquefied natural gas, reduced consumption by industries and fuel storages filled to the brim, that�s raised hopes the continent may avoid shortages this winter even though Russian exports have dwindled.�

�The outlook for winter 2022/23 has been helped by a very mild October, with demand more than 20% below normal,� analysts at Deutsche Bank AG said in a note. �While there are some uncertainties on LNG availability over the coming year, this is a positive sign.�

Still, many officials are warning that the crisis is far from over as global gas supplies remain tight, and next winter could be more challenging. That�s keeping the market nervous about a thin cushion and future volatility -- in case of a supply disruption or a cold wave -- even in the coming months.�

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�2022 Bloomberg L.P.

By Elena Mazneva

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