European natural gas extended its decline, trading at a fresh 21-month low amid record LNG imports and rising stockpiles, according to Bloomberg.
Benchmark futures dropped as much as 2.6%, falling below €37 for the first time since July 2021, following four consecutive weeks of losses.
Prices are less than half their level at the start of the year as Europe recovers from a historic energy crisis in the fallout of Russia’s war in Ukraine. A relatively mild winter, lower demand and an influx of liquefied natural gas have helped to prevent price volatility as the region builds stockpiles for the next heating season.
Western Europe’s LNG imports jumped to a record 10.6 million metric tons in April, driven by shipments into France, Belgium and the Netherlands, data compiled by Bloomberg show. The US supplied about 50% of the fuel, while Russian cargoes accounted for roughly 10%.
“No doubt, consistently high LNG flows, combined with already high inventories, are putting pressure on the market,” said James Waddell, head of European gas and global LNG at consultant Energy Aspects Ltd. “If Chinese LNG demand growth does not pick up and we see a low level of global LNG export plant outages this year, then sub-€40 per megawatt-hour prices make sense.”
Europe’s gas inventories are about 60% full on average, well above normal for this time of year, data from Gas Infrastructure Europe show. That head-start could mean the region refills its stockpiles before the heating season begins later this year.
Still, there is a risk of extreme tightness returning to the market next winter, particularly if cold weather arrives early, according to Goldman Sachs Group Inc. There is also concern that prices could spike as demand from industry picks up. While futures have plunged from their record levels last year, they remain historically high.
“There are many factors which can easily change the situation in Europe,” Marco Saalfrank, head of continental Europe merchant trading at Axpo Solutions AG, said in an interview on the sidelines of the Flame conference in Amsterdam. “This makes it very difficult to make a forecast, but this is also the reason why we still see a certain risk premium.”
Benchmark Dutch gas for May delivery traded 1.9% lower at €36.80 per megawatt-hour. The UK equivalent contract fell by 1.8%.
