European gas prices continue to fall for the sixth consecutive day, their longest negative streak in more than a year.
Indeed, additional supplies of liquefied natural gas (LNG) are flowing into Europe at a time when production cuts in some industries and warming are reducing demand.
The price of the reference gas contract with delivery on the Amsterdam Stock Exchange in January decreased by 9.9% and at 5.15 pm it was 96.73 euros per megawatt-hour. In Britain, the corresponding gas contract weakened by as much as 13%.
LNG carriers are heading from the USA to Europe, including some LNG carriers that originally went to Asia. This raises expectations that the new supplies will ease tensions in the market that is suffering from shortages. Europe has become more attractive to LNG suppliers due to higher prices in the region and the largest customers in Asia have decided to use their stockpile rather than make additional purchases during the winter.
European gas prices have jumped more than 400% this year. The reason was reduced supplies from Russia at a time when the demand for the Corona crisis was recovering. Although prices have fallen over the past week, they are still more than five times the average over the past five years.
However, the drop in prices caused by additional supplies of LNG can only be short-lived. The reason is geopolitical tensions and Russia’s pressure on the European Union and Germany to agree to operate the controversial Nord Stream 2 gas pipeline. In addition, the capacity of European gas storage facilities is still about 23% below the five-year average for this period of the year.
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