January 15, 2024 [Oil Price]- Europe’s benchmark natural gas prices dipped on Monday morning in Amsterdam by 4.8% amid weak industrial demand and bigger-than-average stockpiles for this time of year, despite a prolonged cold snap in northwestern Europe and signs that Qatar may have paused at least five LNG tankers in and around the Red Sea.
The front-month February Dutch TTF Natural Gas Futures, the benchmark for Europe’s gas trading, had slid by 4.82% at $33.35 (30.45 euros) per megawatt-hour (MWh) as of 9:47 a.m. in Amsterdam on Monday.
The prices have largely ignored the deep freeze of the past week in most of Europe as traders believe the market is well supplied to finish this winter season – which we are now halfway through – with sufficient natural gas in storage sites.
Gas withdrawals across Europe have accelerated in the past 10 days, but storage in the EU is still nearly 80% full, according to data from Gas Infrastructure Europe.
As of January 13, EU gas storage sites were 79.7% full, the data showed. Last week’s below-average freezing temperatures saw the biggest withdrawals in a week so far this winter season.
“However, storage remains above the 5-year average of 68% full for this time of year,” ING strategists Warren Patterson and Ewa Manthey wrote in a note on Monday.
“For now, we are still assuming that European storage will finish this heating season at around 52% full, which suggests limited upside for European gas prices,” the analysts added.
High level of inventories, weak demand from industry, and increased confidence that Europe could go through the winter without major supply disruptions have all led to traders becoming more bearish on Europe’s natural gas prices. That’s despite the cold weather and ship-tracking data reported by Bloomberg on Monday that Qatar looks to have paused LNG cargo shipments via the Bab el-Mandeb Strait to the Red Sea/Suez Canal route.
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