The Coal Trader

European Gas Falls 7% on Milder Outlook

European gas prices fell more than 7% on Thursday amid lower power prices and forecasts for milder weather than previously expected.

The continent’s benchmark contract, the Dutch TTF front month, was last seen down EUR 2.54 at EUR 32.97/MWh on Ice Endex, 7.2% lower on a day.

This is more than EUR 4 below the nine-day high of EUR 37.35/MWh seen on Wednesday amid forecasts of a cold spell from mid-next week.

“The latest forecasts, however, show the colder weather will come later and temperatures will not fall as low as previously expected,” said a trader with a German firm.

Germany, Europe’s largest gas consumer, should see an average of 3.8C next week, 2.1C above the seasonal norm, according to Montel’s Energy Quantified (EQ).

Temperatures are forecast to fall 1-2C below reference in the second week of January, but the second half of the month could out-turn up to 7C above the norm with an equally possible colder scenario, according to SMHI.

Others pointed to easing concerns over the key Red Sea shipping route affected by drone attacks on ships by Iran-backed Houthi rebels.

Danish shipping giant AP Moller-Maersk and French shipping giant CMA CGM announced on Wednesday that they would resume transiting along the Red Sea route in the coming weeks.

Bearish pressure

Market participants said gas was also being dragged down by falling power prices, with Germany’s front-month power contract last seen down EUR 5.40 at EUR 89.65/MWh on the EEX exchange.

Meanwhile, supply remained healthy, adding bearish pressure, with EU reserves last seen at 87% of capacity, 4 percentage points up on the year, according to Gas Infrastructure Europe. Flows from Norway remained strong at 348mcm today, according to TSO Gassco.

In carbon trading, the benchmark Dec 2024 EUA contract fell as low as EUR 78.88/t earlier in the session but recovered and was last seen EUR 0.04 on the day at EUR 79.95/t after fresh data showed investors trimmed their short bets by a third last week.

In coal trading, the benchmark front-month API 2 contract was last seen down USD 0.60 at USD 108/t, also on Ice.