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European Gas Slumps to €100 on Mild Weather and Ample Supplies
Natural gas in Europe dropped below €100 per megawatt-hour for the first time since June as unusually warm weather and ample supplies ease fears of shortages this winter.
Benchmark futures finished 13% lower on Monday, and have slumped more than 70% from the peaks of August. High temperatures are expected to remain into next month, delaying the heating season and allowing storage sites to continue to be filled. The fuller-than-usual reserves would provide the buffer needed for when the weather inevitably turns cold.
The improved conditions are easing some pressure on Europe’s policy makers, with the energy crisis helping push the economy to the brink of recession and inflation to the highest level in decades. Despite the recent dip, prices remain about three times higher than the five-year average for the time of the year, and cold snap could quickly renew supply concerns.
“Europe is in a comfortable place concerning supplies now,” said Graham Freedman, an analyst at consultancy Wood Mackenzie. “The risks of blackouts and rationing are receding. But the real test will be when we have cold weather.”
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