European natural gas at its lowest level in almost three years

European natural gas prices fell further on Friday, reaching a nearly three-year low, with comfortable stock levels in European countries combined with milder temperatures and the end of winter calming prices. Around 10:20 a.m. GMT (11:20 a.m. in Paris), the Dutch TTF futures contract, considered the European benchmark for natural gas, lost 3.2% to 22.45 euros per megawatt hour (MWh), shortly after reaching its lowest since May 2021, at 22,315 euros.

Prices continue to fall “as the end of winter approaches with high stock levels,” comment analysts at Energi Danmark. Gas reserves, usually in high demand for heating during the winter, are in fact still 64.69% full on average in EU countries, according to the European Agregated Gas Storage Inventory (AGSI) platform.

“Norway has recently posed some supply problems, but given the very comfortable market situation, this has not been enough to cause real concern,” the analysts said. But “LNG imports remain high,” they add. The TTF's British counterpart also hit a new low since June on Friday, at 55.42 pence per therm, a unit of quantity of heat. In the United Kingdom, gas reserves are 77.15% full, according to AGSI.

On the oil side, prices fell on Friday, investors digesting the fact that the American Federal Reserve (Fed) could decide to keep its key rates high for longer. A barrel of Brent from the North Sea, for delivery in April, lost 1.09% to 82.76 dollars. Its American equivalent, a barrel of West Texas Intermediate (WTI), for delivery the same month, fell 1.25% to $77.63.

Three Fed governors continued Thursday to plead for patience before starting to lower rates, with one even saying he wants to watch inflation figures for “at least a few more months.” “The surprising resilience of the American economy (...) gives the Fed greater room to maneuver to maintain its restrictive monetary policy for an extended period,” explains Ricardo Evangelista, analyst at ActivTrades.

“This dynamic constrains economic growth and suggests a drop in future demand for oil,” thus weighing on prices, he continues. The drop in prices remains limited, however, as investors remain concerned about geopolitical tensions in the Middle East.