Natural Gas: falling prices in Europe and the USA

The benchmark natural gas price in Europe fell to its lowest level in 18 months on Friday as worries about a gas crisis this winter continue to ease thanks to mild weather and above-average inventories across the continent.

Front-month futures at the TTF hub fell 6% in Amsterdam on Friday morning and dipped below the 50 euros ($53) per megawatt-hour (MWh) mark for the first time since August 2021.

Prices are now down more than 85% from their all-time high of 300 euros ($318) per MWh in August 2022, and are down about 35% this year alone. “EU gas is trading below €50/MWh for the first time in 17 months and, just as importantly, winter 23/24 and 24/25 deliveries also continue to soften, both trading at below €60,” Ole Hansen, head of commodity strategy at Saxo Bank, said on Friday, commenting on Friday's price slide.

The climate in many parts of Europe is milder and stock levels are above the five-year average for this time of year. Europe appears to be out of the woods this winter, but the next could be more difficult. Analysts warn that further declines in gas prices in Europe are limited. However, the price remains high when compared to the levels of 2019-2020, practically double.

This situation is also reversing in the USA where gas prices at the Harry Hub are declining, as can be seen from the following graph

U.S. natural gas futures fell further below $2.3/MMBtu on Friday, to their lowest since September 2020 and a 10% weekly drop, as mild weather kept heating demand weak and inventories below above the usual levels. The latest data from the EIA showed that US utilities pulled 100 bcf of gas from storage last week, less than market expectations for a 109 bcf drop. This compares with a decline of 195 bcf in the same period last year and a five-year average of 166 bcf. Last week's cut reduced inventories to 2.266 tcf, 328 bcf higher than this time last year and 183 bcf higher than the five-year average. Meanwhile, the amount of gas flowing to US LNG export facilities has risen to a 10-month high due to a rapid increase in flows to the Freeport LNG export facility, which has been preparing to exit since an 8-month disruption caused by a fire in June 2022. However, temperatures are expected to remain close to normal through March 3, with the exception of a few cold days.

So gas is returning to low prices in the USA, only that there this value is even lower than what was recorded pre-covid, with a big advantage for the local industry.

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The articleNatural gas: falling prices in Europe and the USA comes from Scenari Economici .

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This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/gas-naturale-prezzo-in-caduta-in-europa-e-usa/ on Fri, 17 Feb 2023 16:36:56 +0000.