Natural gas prices are approaching their lowest point in two years. Due to the weak economy, with low or no economic growth, the demand for gas is declining sharply. At the time of writing, a megawatt-hour of gas costs just over 26 euros, almost six percent less than the day before.
This week alone, the price of gas on the major Amsterdam stock exchange has fallen by ten percent. The price of British gas has also fallen by more than three percent. The contrast with last summer is fantastic. At its peak in August 2022, the gas price peaked at €306 per megawatt hour.
Too much offer
The low prices are mainly due to the fear of a recession, which is already a fact in Germany, for example. Demand for gas from industry is low, despite the fact that the price has been declining for some time. As a result, the gas supply continues to increase. Another factor is that countries’ gas reserves are much fuller than normal and a lot of liquefied natural gas, LNG, is flowing into the market. Concerns about gas shortages this winter have also been eased as a result.
According to Philippe Francois, senior portfolio manager at Danske Commodities A/S, there is an oversupply of gas. If nothing changes, prices are likely to fall again in July, he said. China’s disappointing recovery is also contributing to low gas prices. After the economy reopened due to the disruption of the corona rules, analysts had expected significant growth in the Chinese economy. But growth is less than expected. China is a major LNG buyer, but major Chinese LNG buyers are “noticeably absent,” according to the Bloomberg news agency.
Source: BNR
Andrew Dwight is an author and economy journalist who writes for 24 News Globe. He has a deep understanding of financial markets and a passion for analyzing economic trends and news. With a talent for breaking down complex economic concepts into easily understandable terms, Andrew has become a respected voice in the field of economics journalism.
