Natural Gas: Winter's Early Bite Fails to Ignite Prices - Are New Lows Looming?
Lower-than-expected temperatures in the global north during early December and late November have raised eyebrows. This occurrence is particularly rare, especially in light of the ongoing global warming issues as temperatures this low aren't expected so early in the heating season.
Despite this, prices for one of the key energy commodities natural gas have remained in a downtrend since early November, breaking below $3 for the Henry Hub contract recently.
This shows that Europe in particular, which was heavily dependent on supplies from Russia even before the outbreak of the war, managed to get through the crisis without facing a sharp shortage.
The last several days have been marked by the onslaught of winter weather, causing temperatures in northern Europe to reach several degrees below zero at night. Fortunately for the economy, this does not have a major impact on natural gas prices.
This is mainly due to the high storage levels in Europe, which are currently filled to an average of 96%, and the efficient organization of supplies from alternative directions to the East.
Additionally favoring the supply side are temperature forecasts that anticipate warming in the second half of December.
Simultaneously, there is a notable decline in economic activity, especially in the eurozone, where GDP is teetering on the brink of recession. The realization of this economic downturn is anticipated in the first quarters of 2024.
The scale of the challenge facing Europe is shown by a chart of Dutch TTF gas prices, which at their peak in August 2022 reached nearly 340 euro and MMBtu (the key storage replenishment period) to fall below 30 euro by the middle of this year.
Declines in natural gas prices are also noticeable in Asia and
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