EU Natural Gas

May 1, 2019

The Research Team reviews the EU Natural Gas market

 

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1 May 2019

  • Supply conditions have become tighter compared to 10 days ago. This is largely due to lower domestic production (mainly Dutch), in conjunction with an abrupt end to the UK-Belgium flow. This is sending our E-NW spread to very high levels. LNG volumes have also declined in the past 7 days, and are predicted to slow for the next couple of weeks.
  • A series of low pressure systems tracking across Scandinavia will bring very cold air over Europe. As a result, temperatures are forecast to drop substantially, leading to an increase in gas demand. The cold event should affect all of western and central Europe, pushing southward towards the Mediterranean. At the same time, winds are expected to increase – our gas/wind spread is predicted to drop into negative territory (less demand for gas).
  • Macroeconomic conditions have started to exhibit signs (albeit weak) of recovery after a long down-trend. The PMI (north-west and central Europe) is higher than the previous reading (44.50), confirming some early signs from the manufactory sector. However, there are still some concerns regarding a real pick up of economic activity. The latest figure (April) on the BE index, for example, still indicates contraction.

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