European benchmark natural gas prices fell around noon local time on Tuesday as the region's first colder wave brought a lot of wind and powered a higher share of electricity in key markets.
The Dutch TTF Natural Gas Futures, the benchmark for Europe's gas trading, were down by 2.4% at $40.17 (36.43 euros) per megawatt-hour (MWh) at 11:41 a.m. in Amsterdam.
Gas prices were set for their first daily drop in four trading days amid higher wind power generation, which generally limits demand for gas for electricity.
However, the first autumn temperatures in Europe could boost gas demand in the coming days amid constrained supply, with maintenance at some Norwegian export facilities and higher LNG prices in Asia which are driving cargoes away from Europe.
Stronger demand for liquefied natural gas in Asia is pulling more supply to the Asian continent, leaving lower volumes for Europe, where prices are at a discount to the spot Asian prices.
Europe's gas prices are set for volatility in the coming hours and days amid additional concerns about supply and a possible jump in demand in case wind power generation in North Europe falters.
European gas traders are carefully watching the tropical storm Francine in the U.S. Gulf of Mexico, which is strengthening and expected to become a hurricane on Tuesday and make landfall in Louisiana on Wednesday. Francine could make landfall near Cameron, Louisiana, where some of the newest U.S. LNG export facilities have been built.
If the hurricane disrupts American LNG exports, gas prices in Europe could rise. Francine is expected to bring heavy rainfall and the risk of considerable flash flooding for much of Louisiana and Mississippi through Thursday, the National Hurricane Center said early on Tuesday morning.
European gas storage is 93% full, according to data from Gas Infrastructure Europe. This gives some reassurance about supply ahead of the winter heating season.
But gas in storage wouldn't cover Europe's needs for a winter, so traders are watching potential supply disruptions as price drivers.
By Charles Kennedy for Oilprice.com
Charles is a writer for Oilprice.com More
Comments