Benchmark natural gas prices in Europe fell early on Wednesday as global demand for LNG is subdued, European inventories are higher than usual, and renewable energy output has increased in recent days.
The front-month futures at the TTF hub, the benchmark for Europe's gas trading, are trading at around $26.70 (25 euros) per megawatt-hour (MWh), their lowest level in two years. Prices have dropped by as much as 65% since the start of this year and by 90% since the August 2022 record-high of over $320 (300 euros) per MWh.
Weak demand from the industry and from power generators teamed up with the highest gas inventories for this time of the year in years to send the benchmark prices falling since the milder-than-usual winter ended.
As of May 29, natural gas storage sites in the EU were 68.37% full, according to data from Gas Infrastructure Europe. The level of gas in storage is the highest for this time of the year in at least a decade.
At the same time, Germany has generated record solar power in recent days.
Last week, Europe's benchmark price registered their eighth consecutive week of losses, the longest weekly losing streak since 2013.
Demand in China is also weak and is expected to be weak in the near term, with economic data pointing to stunted recovery after the reopening.
China's purchasing managers' index (PMI) declined in May to a five-month
low of 48.8, pointing to a sharper-than-expected contraction in factory activity.
The weaker Chinese data weighed on the outlook for natural gas demand in China, and on gas prices worldwide, analysts 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.
Asian spot LNG prices also fell last week, for a fifth straight week, amid weak demand and comfortable inventories.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More
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