HomeIndustriesEuropean Gas Hits 16-Month Low Amid Supply Surge

European Gas Hits 16-Month Low Amid Supply Surge

European natural gas prices fell to their lowest level since September 2021 with supply being boosted by full stockpiles in China. Benchmark futures plummeted by 15% on Monday, thereby taking losses for the year to 27%.

As a result of excessive stockpiling, Chinese importers are looking to redirect some of their February and March shipments to Europe, particularly as high supply drives down prices within China. This occurrence has subdued concerns that the reopening of the Chinese economy would boost demand and, as a result, reduce European cargo.

This change comes after energy prices surged to peak levels last year. With the emergence of increasing signs that inflation is cooling down, investor optimism is increasing while fears of a recession are cast aside. Although cold weather conditions are expected this week, it is not expected to be extreme enough to significantly dent European gas supplies.

Iberdrola SA’s Chairman Ignacio Sanchez Galan has warned, however, that the crisis that was triggered by the Russia-Ukraine conflict is not yet over and that a resurgence could be possible. While gas prices have declined over the short term, they are still double their five-year average for the time of year.

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