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Europe’s benchmark gas prices were set to post a 6% weekly gain on Friday, the biggest gain since early December, due to expected colder temperatures in eastern and southern Europe next week.
Around noon in Amsterdam on Friday, the TTF price, Europe’s benchmark, had risen by 2.9% on the day to $64.20 (58.70 euros) per megawatt-hour (MWh), as weather forecasts point to lower-than-normal temperatures in some parts of Europe next week.
The European benchmark prices have rebounded this week and jumped by 11% at over $65 (60 euros) per MWh on Tuesday, extending small gains from Monday and recovering some of the losses from last week, when prices slumped by 17%.
Before this week, European gas prices had recorded weekly losses in four out of five weeks. This week, prices were set for a 6% gain around noon on Friday in Europe, the biggest gain since the nearly 10% weekly increase in the week to December 2, according to data by ICE Endex compiled by Bloomberg.
Still, European gas prices are well below the records seen last year due to the mild weather at the start of the winter heating season, continued strong LNG inflows, and a rebound in Norwegian pipeline gas flows. Gas storage sites across Europe were more than 71% full as of February 1, according to data from Gas Infrastructure Europe. That’s well above the five-year average for this time of the year.
Quieter spot LNG market buying in China and Japan in recent weeks has also helped keep European prices lower as signs of intensifying competition between Europe and Asia have yet to be seen.
The record gas prices in Europe could be behind us, according to ING’s revised outlook on natural gas for this year.
“Mild weather and weak industrial demand have ensured that gas storage has remained strong. The region should get through this winter comfortably and prospects also look better for the 23/24 winter,” Warren Patterson, Head of Commodities Strategy at ING, said on Monday.
The bank expects the TTF price to average around $65-71 (60-65 euros) per MWh over the first half of 2023—around current levels, before increasing to $82-87 (75-80 euros) per MWh over the second half of the year.
By Michael Kern for Oilprice.com
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Michael Kern is a newswriter and editor at Safehaven.com and Oilprice.com,