European Natural Gas Demand Increases Along With Further Supply Cuts From Gazprom

Hamburg, Germany- The rise in demand and uptick in trading activities have resulted in firmer European Natural Gas prices this week. As a result of full stockpiles in China, Liquefied Natural Gas (LNG) importers are diverting February and March shipments to Europe, boosting LNG imports. In light of lower Norwegian gas flows and the potential for further supply risks, European Natural Gas prices have risen. Dutch LNG terminal EemsEnergy Terminal reported technical problems at energy supplier RWE AG, a German multinational energy company, on January 13, preventing it from sending any gas until January 30.

However, the prices are still lower, with weak benchmark futures for February and March 2023. As per the Gas Infrastructure Europe on January 15, 2023, the Natural Gas inventories across the European Union (EU) and the United Kingdom were 922 terawatt-hours. As of January 18, the Natural Gas futures for delivery at the Title Transfer Facility (TTF) in the Netherlands decreased by USD 1.92 to the price trend of USD 20.10/MMBtu.

On January 20, Gazprom reduced its pipeline gas transit TurkStream running from Russia to Turkey. Lower pipeline flows resulted from lower demand for gas under long-term contracts and cheaper spot supply due to milder weather in parts of Europe. Gas transit flows from Russia via Ukraine were down to 24.4 million cubic meters, compared to 25.1 million cubic meters on January 19, 2023.

According to ChemAnalyst, the price of Natural Gas in Europe will remain lull along with tepid market fundamentals in the forthcoming weeks. Despite recovering demand and an increase in LNG exports, the adequate trading volume among the storage units will cap the prices to increase to record highs. The benchmark futures of Natural Gas in Europe will also remain on the lower end forcing the producers to trade in a weaker price range.