Gas prices - two views ex T graph19 Apr 2023 13:02
9:28AM Gas prices fall as demand remains muted in Asia
European natural gas prices have fallen after fluctuating this morning, with traders weighing potential supply risks later this year against signs that demand on the continent remains muted.
Prices have been trading in a relatively narrow range in recent weeks — after hitting the lowest level since mid-2021 in
March — as Europe ended the winter with higher-than-normal gas stockpiles.
Gas appetite in the rival Asian market has also been lacklustre, allowing more fuel cargoes to head to Europe.
Liquefied natural gas shipments in the northwest of the continent — where key consumers are located — may hit a record this month, ship-tracking and port data show.
Meanwhile, gas usage may stay lower for longer.
Dutch front-month gas, Europe's pricing benchmark, traded 0.6pc lower at less than €42.50 per megawatt hour.
UK gas futures for May edged lower by 0.2pc.
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Russia has warned Europe that it faces a fresh gas crisis next winter as it scrambles to restock reserves as Vladimir Putin launches a new attempt to weaponise energy. Gazprom, Russia’s state-owned gas supplier, said Europe had made it through winter despite cuts in Russian gas supplies owing to mild temperatures but warned there “is no guarantee that nature will make such a gift” again.
In a statement on Twitter, it said restocking for next winter would not be easy, blaming “politically motivated decisions aimed at halting the imports of Russian pipeline gas”. Russia curbed pipeline gas supplies to Europe last year in retaliation for sanctions issued in the wake of its invasion of Ukraine. The scramble to replace Russian gas with imports from around the world triggered a surge in prices and a major cost of living crisis that has cost Europe’s governments billions of euros.
However, Europe is now emerging from winter with gas stocks more than half full, close to record highs for the time of year. That puts the continent in a stronger position to manage with less Russian gas, while it can also lean on imports of liquified natural gas (LNG) from elsewhere. Russian pipeline flows to Europe are currently averaging about 67m cubic metres per day in April 2023, compared with around 281m cubic metres per day in April 2022, according to Alex Froley, senior LNG analyst at market experts ICIS.
The drop in exports has harmed Russia’s coffers, with revenues from oil and gas exports reportedly 40pc to 50pc lower in January and February compared to the same months a year earlier.
Mr Froley said: “Because industries and consumers cut their demand because of high prices, and it was a mild winter, Europe has a lot more gas in storage than you would have expected.
“So in most of our modelling, it should be pretty achievable for Europe to refill gas storage ahead of next winter.
“We don't don't expect any enormous price spikes this summer of the type that we saw last year.”
However,.....
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