(Montel) Europe is set for a mild autumn and start to winter, which should lower gas demand for heating, forecasters and traders told Montel.
“These forecasts are primarily based on historical analogues for the strengthening El Nino and warm sea surface temperatures in the Atlantic.”
US forecaster Atmospheric G2 said it expected Spain, France and Italy to see above normal temperatures from October-December. Germany – Europe’s largest gas consumer – should be warmer than normal next month and in line with seasonal norms in November and December, the forecasts showed.
“This is what the market is currently pricing in. The new normal is mild and windy as global warming is progressing,” said a German trader.
“Only if we should see a prolonged cold of 4-6 weeks, which would draw on gas storage significantly, then we would see a price reaction. But nobody expects that right now.”
Robin Girmes, forecaster at Energy Weather, also expected a mild period ahead.
“The overall outlook is bearish for gas,” he said. “While there may regional cold episodes, the overall warmth is going to prevail.”
High storage levels
The forecasts should ease fears for supply security, said market participants, after a mild September across Europe that had avoided an early start to the heating season.
If the winter did turn cold, however, gas stocks could erode to almost 10% of capacity, Montel reported last week.
European gas storage facilities were last seen at 94.2% of capacity, up nearly 10 percentage points from the same time last year, data from Gas Infrastructure Europe showed.
The continent’s benchmark TTF front-month gas contract was last seen up EUR 0.91 at EUR 35.38/MWh, on Ice Endex.
European gas prices have averaged EUR 40/MWh so far this year, down from highs above EUR 300/MWh last summer as Russia curbed pipeline supplies to Europe and the bloc scrambled to prepare for its first winter without high flows of Russian gas.