European gas prices stabilise but are set to fall further

Storage levels and reduced demand during the summer months have driven the declines but benchmark contracts are set for a drop of about 5%, even as contracts edged higher on July 12.

European natural gas stabilised about €32 per megawatt-hour, near eight-week lows — however, prices are poised for their biggest weekly loss in over two months as the region’s supply risks ease.

Storage levels and reduced demand during the summer months have driven the declines, but benchmark contracts are set for a drop of about 5%, even as contracts edged higher on July 12.

That is the biggest weekly decline since late April, when traders were just starting to rebuild inventories ahead of next winter.

Europe’s storage facilities are about 80% full entering peak summer, but this is overall unusually high for this time of year.

Meanwhile, stronger renewable generation and steady flows from Norway is helping to assuage concerns over lower liquefied natural gas supplies due to higher demand elsewhere.

During the first six months in Ireland, wind farms generated 34% of total electricity demand in the first half of the year, according to Wind Energy Ireland.

The average wholesale price of electricity per megawatt-hour (MWh) in June was €107.74, but on days with the most wind power, the average cost of a MWh of electricity fell to €86.78 and rose to €125.98 on days energy demand was fuelled most by fossil fuels.

Elsewhere, oil climbed for a third day on July 12 as key market gauges flashed signs of stronger demand and traders gauged the outlook for interest rates — however, brent crude was still set for a weekly decline.

Brent crude futures ticked upward by 0.57% to near $86 a barrel and were set to fall about 1% week-on-week following four weekly gains.

• Reporting by Bloomberg, Reuters and The Irish Examiner