European natural gas futures rose from a 23-month low, in a sign that traders see €30 as a floor for prices for now, with demand remaining stubbornly low.
Benchmark futures climbed as much as 2.2% after dropping below €30 for the first time since June 2021 on Thursday. The market is finding a lower limit after a seven-week streak of declines, the longest in six years driven by stable supply, mild weather and stronger renewable generation.
The gain on Friday shows that there may be room for higher prices once temperatures pick up, boosting demand for cooling. Sunnier and warmer weather is expected over most of Germany this weekend, while below-average temperatures are forecast across Spain, meteorologist Maxar Technologies Inc. said in a report. Last summer, Europe faced abnormal heat and drought that affected hydro power and some nuclear plants, bolstering the use of gas.
Weather-driven price surges aside, the longer-trem drivers point downwards, according to Energy Aspects Ltd. The lack of industrial demand, despite lower prices and strong LNG flows to Europe means prices could continue to slide over the coming weeks.
Europe began the refilling season for gas storage with high inventories after a mild winter which has helped to keep a lid on prices. Recent injections mean Europe is on track to fill sites by early summer, which is a significant downward risk to late-third quarter prices, Energy Aspects analysts said in a note.
Dutch front-month gas, Europe’s benchmark, was up 0.7% at €30 per megawatt-hour by 9:07 a.m. in Amsterdam. A UK equivalent contract also traded higher.
