European natural gas prices drop as winter approaches

European natural gas prices drop as winter approaches

European natural gas prices fell on Tuesday as mild weather and abundant stockpiles eased concerns about shortages. According to a report in Bloomberg, the benchmark futures fell as much as 6.4% to the lowest level since July.

The report said that some forecasters expect higher than normal temperatures in the U.K. and continental Europe in the next two weeks, which could lead to a delay in gas inventories for heating.

These may be indications that the area can survive the winter even with dwindling Russian supplies.

The Dutch front-month gas futures, which is a benchmark for Europe, dropped by 4.7% to €162 a megawatt-hour. It had declined by 10% on Monday.

The report said that reserves filled at a stable pace through the summer as countries increased their imports of natural gas and pipeline supplies from Norway to counter the loss of Russian flows. It added that storage sites were close to 88% full on Saturday, just above the five-year average for this time of year.

Russian energy giant Gazprom PJSC OGZPY is set to allow Hungary to delay payments for natural gas if necessary, due to the surging imports that threaten to derail the country s strained budget. The move came days after the company suspended natural gas deliveries to Italy in an apparent tussle over regulation in Austria.

Price Action: The United States Natural Gas Fund, LP UNG, has gained over 75% this year, while the First Trust Natural Gas ETF FCG gained over 35% in 2022.