European natural gas prices fell for a fourth day as US supplies are expected to bring relief to the tight market and traders weighed both milder weather and risks to demand from the Omicron virus variant.
Benchmark Dutch front-month gas fell as much as 19% to 90 euros ($101.88) a megawatt-hour, the lowest since 6 December. German power for January declined as much as 36% to 220 euros per megawatt-hour as lower gas prices make it less expensive to generate electricity.
European natural gas contracts have been extremely volatile. Prices soared to record levels above 180 euros per megawatt-hour last Tuesday, following a sharp drop in Russian flows. That’s 10 times higher than year-earlier prices. Since then, the fuel has slumped as shipments of liquefied natural gas head to Europe, easing an energy crunch that’s forced heavy industries to curb output.
“As we enter the closing stages of 2021, the European energy complex shows no sign of calming down for the holiday period,” Timera Energy consultancy said in a report on Monday. “Industrial demand has been struggling in response, with metals and fertilizer producers having to curtail production.”
An increasing number of LNG vessels are heading to western European ports. The region is attracting more supplies as Asia’s biggest LNG buyers are opting to use their inventories this winter instead of procuring more.
Milder weather forecast for much of mainland Europe will curb energy demand, while there was also uncertainty over the impact of fast-spreading Omicron. Coronavirus infections surged across the globe and over the weekend China reported the highest number of local cases since January.
Still, there is no immediate end in sight for Europe’s energy crisis. Zero pipeline space was booked for Monday on day-ahead auctions to deliver natural gas through Mallnow in Germany, where Russia’s Yamal-Europe pipeline terminates, according to the Regional Booking Platform.
Russia’s Gazprom isn’t booking the route because it has no requests from European clients, Russian President Vladimir Putin said on 23 December. The company doesn’t plan to offer spot gas at its electronic sales platform this week either, it said on Monday. It hasn’t offered spot gas on the platform since the start of November.
Benchmark gas traded down about 12% as of 12:49 p.m. in Amsterdam. German power was 19% lower.