Europe’s Gas Traders Start Tapping Storage as Cold Snap Arrives
(Bloomberg) -- European natural gas traders have started taking fuel out of the region’s record inventories as colder weather settles in, drawing from its buffer against winter supply shocks.
Consecutive net withdrawals took place for the first time since April this week, data from Gas Infrastructure Europe show, and may accelerate as parts of Europe face below-normal temperatures over the weekend. For now the withdrawals are marginal, and storage facilities remain over 99% full.
Benchmark prices fell on Friday and headed for a weekly loss.
The continent, which has struggled in the aftermath of last year’s energy crisis, amassed record amounts of gas to prepare for the upcoming winter. The stored fuel will serve consumers when demand spikes during cold snaps or potential supply disruptions. Still, Europe remains vulnerable to changes in global flows after losing key pipeline supplies from Russia.
The latest storage withdrawals coincide with a forecast for a brief cold snap in northwest Europe, in particular in the UK, where “chilly” weather is seen through Sunday, according to the Met Office. Storage facilities may still resume gas injections if warmer-than-average temperatures from Frankfurt to Paris next week reduce heating needs.
Energy Aspects Ltd. said in a note this week that it expects residential and commercial demand to remain about 17% below the norm this winter, compared with 21% a year earlier.
“A greater number of households have also installed heat pumps, switched to other forms of heating or insulated their homes year-on-year, also contributing to the loss of demand,” the analysts said.
Front-month gas in the Netherlands, Europe’s benchmark, slid to € a megawatt-hours by 10:03 a.m. in Amsterdam.
©2023 Bloomberg L.P.
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