(Bloomberg) -- European natural gas prices edged higher amid signs temperatures in northern Europe will drop below seasonal norms once again ahead of Christmas, boosting heating demand.
Benchmark futures rose as much as 2.5% after opening down in thin trading on Thursday. Despite warming temperatures across the region early next week, temperatures are set to return below the seasonal average by the end of next week in the Nordics and the UK, according to forecaster Maxar.
EUROPE WEATHER: Milder Weather to Be Short-Lived in UK, Nordics
A cold blast is now sweeping through northwest Europe, boosting demand for gas in heating. Amid severely reduced Russian pipeline-gas flows, the region is relying on stockpiles it amassed over the summer and mild fall. In addition, a record — for the time of the year — number of tankers are arriving with liquefied natural gas. But attention is shifting to next year.
Meanwhile, competition for LNG is set to intensify as Beijing pivots away from its Covid Zero policy, which is poised to boost demand. China bought several shipments of the fuel for next year. Europe’s record LNG wave this year came largely as the Asian nation’s consumption was subdued. Global supply won’t increase substantially until the middle of the decade.
“Commodity prices (gas and power) will continue to stay elevated due to geopolitically driven gas curtailments,” analysts at Sanford C Bernstein & Co LLC said in an emailed note.
Storage sites across Europe are now about 87% full, having shed about nine percentage points over the first month of net withdrawals. For the time of the year, Britain had the highest consumption of gas on record on Dec. 13, according to National Grid (LON:NG) data.
Dutch front-month futures, Europe’s gas benchmark, traded 1.5% higher at €133.50 a megawatt-hour by 8:36 a.m. in Amsterdam.
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