Prices Of European Natural Gas Decrease Due To Weak Global Demand

Benchmark natural gas prices in Europe decreased early on Wednesday due to a decrease in LNG demand globally, higher-than-normal stockpiles in Europe, and an increase in recent renewable energy production.

At roughly $26.70 (25 euros) per megawatt-hour (MWh), the front-month futures at the TTF hub, the benchmark for gas trading in Europe, are trading at their lowest level in two years. Prices have decreased by up to 65% since the beginning of this year and by 90% from the record-high of more than $320 (300 euros) per MWh in August 2022.

The lowest benchmark prices since the conclusion of the milder-than-usual winter were caused by a combination of weak demand from the sector and from power producers and the biggest gas stockpiles for this time of year in years.

According to information from Gas Infrastructure Europe, natural gas storage facilities in the EU were 68.37% full as of May 29. The amount of petrol in storage is at its greatest point for this season in at least ten years.

Germany has recently produced unprecedented amounts of solar energy at the same time. 

The benchmark price for Europe reported its eighth straight week of losses last week, the longest weekly losing sequence since 2013.

With economic statistics indicating a stifled rebound following the reopening, demand in China is likewise poor and is predicted to remain weak in the foreseeable future.
In May, China's purchasing managers' Index (PMI) fell to a five-month low.

low of 48.8, suggesting a more severe decline in industry activity than anticipated. 

The forecast for China's natural gas consumption, as well as gas prices globally, were both hampered by the poor Chinese statistics, experts said.

“Most recently the China manufacturing data pointing to weakness and, with that, potentially weaker competition for LNG,” Ole Hansen, head of commodities strategy at Saxo Bank, told Bloomberg on Wednesday.

For the fifth week in a row, Asian spot LNG prices declined last week due to low demand and ample supplies.