European Natural Gas Prices Hit Two-Week Low as Stockpiles Rise

European natural gas prices dipped to the lowest level in two weeks as fuel held in storage facilities across Europe edged above the seasonal norm.

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(Bloomberg) — European natural gas prices dipped to the lowest level in two weeks as fuel held in storage facilities across Europe edged above the seasonal norm.

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Benchmark gas declined as much as 2.9%, sliding for a third session. The continent’s storage sites are 72% full, compared to the average for the previous five years of 70.1%, data from Gas Infrastructure Europe show.

The region is rushing to replenish stockpiles before winter to manage the risk of further disruptions from Russia, importing much more liquefied gas than usual to achieve this aim. Moscow has curbed flows amid heightened regional tensions following its invasion of Ukraine, sparking an energy crisis that has spilled into the European Union’s broader economy.

“The market feels confident that storage facilities will be well full across the continent by late autumn, as is the target from the EU,” analysts at trading firm Energi Danmark said in a note. “However, as flows from Russia remain diminished, there are nonetheless so many fears concerning supply during winter, that the market remains elevated.”

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Russian flows via Nord Stream, the main gas pipeline to the continent, have been broadly stable at around 20% of the link’s capacity since late-July, when Moscow cut shipments from 40%. Russia’s Gazprom PJSC has cited issues with turbine maintenance, including sanctions-related delays for the return of equipment, for the reduced flows.

Meanwhile, orders for Norwegian gas dipped on Tuesday after sliding 3.6% over the previous four days. Several facilities considered crucial for supplies to the UK and continental Europe are either undergoing or scheduled to start seasonal works this week.

Extreme Heat

Much of Europe is bracing for another heat wave, which could boost electricity demand for cooling. Temperatures in the UK and France will peak from Thursday to Saturday and move eastward during the next week, forecaster Maxar said in a report.

Germany needs to cut gas consumption by 20% to cope this winter and next, Klaus Mueller, president of the federal network agency BNetzA, said on ZDF TV Tuesday. If all EU nations save gas, that can stabilize or even bring down prices, helping to ensure enough storage for the fall and winter, he added.

Dutch front-month gas, the European benchmark, traded 1.1% lower at 190.87 euros per megawatt-hour by 11:32 a.m. in Amsterdam. The UK equivalent shed 2.2% to 396.35 pence a therm.