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European Gas Prices Fall to 10-year Low
European natural gas prices are set to fall further below their lowest level in a decade as suppliers show little sign of reducing large volumes of gas supplies, according to World Oil Frankfurt Bloomberg.Inventories are approaching capacity weeks earlier than usual, and tankers and pipelines are increasingly loaded with fuel. The benchmark price for Dutch natural gas is struggling to recover from a collapse below 10 euros ($11) per megawatt-hour earlier this summer, even as producers cut flows to gas fields and processing plants for repairs and maintenance.
Gas storage stations in northern Europe will be full in September, raising the risk of further price falls, said Niek van Kouteren, a senior trader at Dutch energy company PXEM. At a certain price, producers will be forced to pump less gas. But at the same time, big suppliers like Russia "are working to increase market share.
The only way for European prices to recover is to cut flows from Russia or Norway or stop more liquefied natural gas arrivals, said Norbert Ruecker, head of economics at Julius Baer Group Ltd. Dutch prices could fall another 20% in the fall over the next month. "If things get really bad, the bear case could be even lower." ”
Russian energy giant Gazprom PJSC said last week that exports to Europe would fall to 192 billion cubic meters this year, down 4.5% from the record high in 2018. The company's average gas price is also expected to fall 13% compared with last year's record.
Still, it seems unlikely that Gazprom will stop selling gas simply because of low prices.
Mikhail Malgin, deputy head of Gazprom's exports department, said in a conference call with analysts last week. "Market share is not a goal in itself, but a result of our actions."
Ahmed Hammoudan, senior gas trader at Dutch energy company Eneco, said prices would have to fall further for producers to cut production significantly.
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