Global Markets

Gas Prices in Europe Have Been Declining for More Than a Year

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As imports from the United States look ready to ease the region’s energy shortage, European natural gas prices fell for the first time in more than a year.

Benchmark TTF Natural Gas Futures in the Netherlands declined for the sixth day in a row, falling as much as 8.3% in Amsterdam. More liquefied natural gas-carrying tankers are sailing to Europe, raising hopes that the increased supplies would help to rebalance the tight market. Prices have fallen after reaching new highs last week due to a substantial reduction in Russian gas exports.

Traders are also watching to see if Russia is prepared to book pipeline capacity next month to export additional gas to Europe. On Tuesday, they will be following a monthly transit capacity auction, which will provide insight into Gazprom (MCX: GAZP) PJSC’s intentions for January.

According to early morning data from operator Gascade, Russian flows via Mallnow to Germany were blocked on Tuesday. On Monday, Russia rejected to reserve any entrance capacity in a daily auction. For 9:50 a.m. in Amsterdam, Dutch front-month gas was trading at 98 euros per megawatt-hour. ICE (NYSE: ICE) Futures Europe, which trades gas in the United Kingdom, was closed for the holidays.

Over the weekend, the number of US LNG shipments bound for European ports increased by one-third. The region is receiving additional supply as Asia’s largest importers choose to utilize their existing inventories rather than procure more this winter.

Weather forecast for much of continental Europe next week is expected to be milder, which will reduce energy demand. Nonetheless, the market is on edge as estimates indicate that temperatures will plummet to well below normal in the second week of January.