European gas falls as first cold snap eases and wind returns

The EU receives around 45% of its gas imports from Russia.

European natural gas fell as the first cold snap of winter drew to a close, while EU leaders pushed for a deal to cap prices.

Benchmark futures fell as much as 10% on Friday, heading for a weekly decline after four straight gains. The cold weather has forced gas to be pulled from storage to meet increased demand, but reserves remain fuller than normal. Germany’s economy ministry said it was not concerned about the pace and that security of supply was assured.

Inflows of liquefied natural gas are at their highest level for the time of year, further cushioning the impact of cold weather. Demand could ease with wind power generation forecast to rise in the coming days in Britain and Germany, while milder temperatures early next week will also provide some respite ahead of another cold wave around Christmas.

“Despite a sharp increase in net storage withdrawals in recent days, EU gas stocks remain comfortable,” EnergyScan, Engie SA’s analytics platform, said in a note.

To contain the energy crisis that has engulfed the economy and end months of political wrangling, European Union leaders backed a quick deal on Thursday for a controversial cap on gasoline prices. They asked ministers to finalize the plan, along with a package of other measures, during a meeting on Monday. The key point of the price cap level has yet to be resolved.

There is “great confidence that an agreement can be reached,” Nina Scheer, the top energy lawmaker in Germany’s SPD party, told Deutschlandfunk radio. “The trend is clear that no one wants a price that endangers purchases, this message is also clear in the room.”

First-month Dutch futures, a European benchmark, were down 8.6% at €123.20 (~R2300) per megawatt-hour at 12:43pm in Amsterdam. The UK equivalent fell 8.6%.

– With the assistance of Petra Sorge.

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