However, natural gas prices in Europe are moving at still high levels, up 40% since the start of the year.
European gas prices were down on Monday, touching their lowest price since June, as Europe reported near-full inventories to weather winter, when oil suffered from recession fears. Around 10:30 a.m. GMT (12:30 p.m. in Paris), the Dutch TTF futures contract, the benchmark for natural gas in Europe, moved to 98.60 euros per megawatt hour (MWh), thus falling back below 100 euros per MWh, a first since June.
“Prices have come down significantly from what we saw in August and September, thanks to mild autumn weather across Europe and high storage levels ahead of the onset of winter», Comment the analysts of Energi Danmark. PVM Energy estimates that the European Union’s natural gas reserves are 92% full.
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At the end of August, the TTF had climbed to 342.005 euros per MWh, less than 3 euros from its historic high reached in March a few days after the start of the Russian invasion of Ukraine. However, natural gas prices in Europe are moving at still high levels, up 40% since the start of the year. For Stephen Brennock, of PVM Energy, “the abundance of supply (…) and the fall in gas prices have reduced the prospects for substituting gas for oil», in particular for heating, for the next few months, thus releasing the pressure on crude oil prices.
The barrel of Brent from the North Sea for delivery in December lost 0.71% to 92.84 dollars, and its American counterpart, the barrel of American West Texas Intermediate (WTI) for delivery the same month fell by 1.02% at $84.18. Even if the two raw materials are only marginally substitutable, the prices of gas, recently pushed to stratospheric levels, had encouraged the search for substitutes such as diesel, which turns out to be a good alternative for heating or even the production of electricity.
Discouraging gas prices had thus increased the demand for crude. Otherwise, “the rising dollar and global demand uncertainty continue to put pressure on commodity pricesadds Walid Koudmani, analyst at XTB. As crude is traded in dollars, a marked appreciation of the greenback weighs on black gold, since it weakens the purchasing power of investors using other currencies.
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