Cold Blast Across Europe To Intensify Next Week As Gas Markets Remain Uncertain
The first wave of winter in Europe is expected to bring freezing temperatures from the end of this week until early December, increasing heating demand across commercial and residential properties while the continent's natural gas reserves are full.
According to Bloomberg data, average temperatures in North West Europe will begin sliding from 48F on Wednesday to 32F by Dec. 2.
Forecaster Maxar Technologies Inc. expects most of Europe to be colder than average by Dec. 6.
#Natgas
— Heinrich Leopold (@LeopoldHeinrich) November 21, 2023
Strato temps are warming up as the Arctic bubble goes from a compact circle on Nov18 to a highly concentrated bubble attracting warm air from oceans on Nov29 and disintegrating, sending polar air over continents on Dec6. Europe will be extremely cold over the weekend. pic.twitter.com/wSOrYmfMvk
A refreshing change to see much of Europe under blue T2m anomalies (below average temperatures) on 00z EPS - from this weekend right through to 7th Dec 🥶. It's turning colder but for how long and whether it will get cold enough for UK lowland #snow is the great unknown for now. pic.twitter.com/G3D9u8vyfc
— Nick's Weather Eye (@NickJF75) November 22, 2023
After supply chaos sent Dutch TTF Natural Gas Futures to record highs in 2022, a combination of mild weather and waning demand pushed prices lower and allowed the EU to fill NatGas storage. On a seasonal basis, EU inventories are at the highest level for this time of year over the last decade.
However, even though inventories are full, the International Energy Agency warns: "Major uncertainties remain ahead of the upcoming heating season." A cold snap across the continent, a complete halt of piped NatGas supplies from Russia, and turmoil in the Middle East could quickly spark volatility in energy markets.
Since TTF NatGas prices peaked at 331 euros per megawatt-hour (MWh) in August 2022, prices have plunged to 23 euros in June. Since then, prices have risen 85% to 43 euros ahead of the Northern Hemisphere winter.
According to Ana Maria Jaller-Makarewicz, energy analyst at the Institute for Energy Economics and Financial Analysis, NatGas markets "are becoming riskier: Gas and LNG prices are increasingly volatile and greatly affected by global factors."
"The uncertainty of future events that could affect gas supply makes it extremely difficult to predict how supply and demand could be balanced and by how much prices could escalate," she said, adding, "As seen in last year's events in Europe, the only way that importing countries can mitigate that risk is by reducing their internal consumption."
Energy markets are currently stable. However, a severe winter in the Northern Hemisphere could be the catalyst that plunges these markets back into turmoil.