European gas slumps as first cold snap eases and wind returns

European natural gas declined as the winter’s first cold wave neared an end, while EU leaders pushed for a deal on capping prices. 

Benchmark futures dropped as much as 10% on Friday, and were headed for a weekly decline after four straight increases. The chill has been forcing gas draws from storage to meet rising demand, but reserves remain fuller than normal. Germany’s economy ministry said it wasn’t concerned with the pace, and that security of supply was assured. 

Inflows of liquefied natural gas are at the highest level for the time of the year, further cushioning the impact of the chilly weather. Demand could ease with wind power generation forecast to increase in coming days in Britain and Germany, while milder temperatures early next week will also bring some respite before another cold wave around Christmas.

“Despite the strong increase in net storage withdrawals in the past days, EU gas stocks remain comfortable,” EnergyScan, the analysis platform of Engie SA, said in a note.

To contain the energy crisis that has engulfed the economy and put an end to months of political wrangling, European Union leaders on Thursday backed a quick agreement for a controversial gas-price cap. They called on ministers to finalize the plan, along with a package of other measures, during a meeting on Monday. The key sticking point of the level of the price cap still needs to be resolved.

There is “great confidence that an agreement can be reached,” Nina Scheer, the principal energy lawmaker of Germany’s SPD party, said on Deutschlandfunk radio. “The tendency is clear that no one wants a price that jeopardizes purchases, this message is also clear in the room.”

Dutch front-month gas futures, a European benchmark, were 8.6% lower at €123.20 a megawatt-hour at 12:43 p.m. in Amsterdam. The UK equivalent fell 8.6%.