European natural gas rebounded after forecasts showed that the weather was cooler than previously estimated next week.
Benchmark futures rose by as much as 11% in March. Some models estimate temperatures will drop again after a warm spell, potentially boosting gas usage in heating and forcing more withdrawals from fuller than normal storage sites. Maxar Technologies Inc. sees cooler conditions in northern and central Europe next week, but still close to average levels for the time of year.
Even though much of the sting has gone out, the energy crisis is alive because of the snaps of cold weather. There is a belief that inflation has passed its peak and a recession could be averted, and gas prices are heading for a second monthly decline. The weather has been the main factor in the market's response to any signs of an increase in consumption.
Tim Partridge, head of energy trading at Zenergi Group, said that there was reduced risk because of the lower demand for gas with plenty in storage. He said that pockets of colder weather, along with some outages recently, are still supporting near-term prices.
Benchmark Dutch gas for March was 9.1% higher at €60.15 a megawatt-hour by 9: 23 a.m. in Amsterdam. 8.7% of the UK equivalent contract was added.
ING Groep NV expects prices to be around €60 to €65 over the first half of 2023, increasing to as much as €80 in the second half. It is higher than current levels, but it is less than last year when gas rose to record highs.
The bank said this week that it isn't looking as bad as it did just a few months ago. There are two key risks - a full halt to already curbed pipeline flows from Russia and Chinese demand for liquefied natural gas.
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