2023-05-26 08:39:41 ET
Benchmark European natural gas futures fell more than 4% Friday before paring losses, putting them on track for an eighth straight week of declines and extending this year's drop to more than 66%.
The Dutch benchmark front-month contract touched its lowest since May 2021, tumbling to €24.56/MWh before rebounding to €25.34/MWh.
Industrial demand for natural gas is weak along with the broader European economy, with Germany enduring its first recession since the start of the pandemic.
Other factors contributing to gas price weakness include higher than normal storage levels, mild temperatures and an abundance of liquefied natural gas, raising questions about how much lower prices can go before producers start cutting output.
ETFs: ( NYSEARCA: UNG ), ( UGAZF ), ( BOIL ), ( KOLD ), ( UNL ), ( FCG )
European Union gas demand could fall by more than the total volume of gas imported from Russia this year, the European Commission has said, according to reports.
An EU internal document said policies to save energy should cut consumption in 2023 by 60B cm compared with the bloc's average use over the past five years.
The amount saved is "more than the gas volumes we still foresee to import from Russia in 2023, both pipeline and LNG," the document said, as well as 8B cm more than the EU managed to save at the height of its energy crisis last year.
In the U.S., natural gas prices look set to revive and possibly could double during the next 16 months, but natural gas ETFs "could disappoint," John Overstreet writes in an analysis published on Seeking Alpha .
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Benchmark Dutch wholesale gas drops to two-year low, down eight straight weeks