HOW IS THE WEATHER AFFECTING NATURAL GAS PRICES IN EUROPE
HOW IS THE WEATHER AFFECTING NATURAL GAS PRICES IN EUROPE
In October, natural gas prices in Europe increased by 15%, and last week they reached an eight-month high as the commodity was supported by milder weather and other basic factors.Following the closure of the Tamar field in the Mediterranean Sea, the ongoing turmoil in the Middle East has also had an effect on natural gas prices. Concerns have also been raised over the safety of Qatari LNG ships traveling through the Strait of Hormuz.The growing demand for LNG in China, which has increased 6% this year, is also expected to drive up natural gas prices in Europe as the race for supply intensifies.
Europe’s benchmark Dutch December gas contract was up 2.85% at €49.95 per megawatt hour (MWh) on the TTF intraday chart at the time of writing. Even if it’s more expensive, the price is still significantly less than when it was trading at €120 this time last year.However, milder weather is predicted for the first week of November across the continent, and Trading Economics data indicates that gas inventories in Europe are still about 99% full. This could lead to a decline in gas prices as demand for heating drops.
Short-term weather prediction for Europe
November is predicted to be a warmer and more precipitous month throughout Europe, with milder temperatures predicted for Germany, Poland, and a large portion of the Balkans.During the first part of the month, temperatures are expected to be 6°C above the seasonal average. Numerous weather outlets are also predicting the return of El Niño, which is a phenomenon whereby the Pacific Ocean’s waters warm significantly above average.Global temperature rises by about 0.2 degrees Celsius during the occurrence, according to the US National Oceanic and Atmospheric Administration (NOAA).Reduced demand for natural gas as a result of the warmer weather predicted helps to stabilize the commodity’s price on the markets as investors take into account the underlying factors influencing the price.
Natural gas price forecast for Europe
Natural gas prices are influenced by a complicated interplay between supply and demand, weather patterns, geopolitical concerns, and trader emotion, as revealed by Michael Baker, head of UK premium clients at Capital.com, in an interview with Euronews.The Middle East’s continuous turmoil appears to be particularly vulnerable for the gas markets, as Osama Rizvi, an economist and energy analyst at Primary Vision Network, pointed out to Euronews.Nonetheless, a number of indications point to the possibility that prices will return to pre-conflict levels short of a full-scale conflict. Firstly, stocks in Europe are 99 percent full.Second, Europe has a very low demand for industrial gas. In Germany, for example, during the first half of the year, home consumption decreased by 37 TWh while industrial demand declined by 54 TWh. Additionally, profits have decreased,” he said.
