Prices for EUROPE Gas remain at a 1-month low as U.S. Tariffs threaten Demand
Dutch and British gas rates fell on Friday morning, trading at their lowest level since early March. This is due to fears that the U.S.-led global trade war could reduce industrial activity and decrease gas demand.
LSEG data shows that the Dutch front-month contract fell 0.48 euros to 39.00 euros per Megawatt Hour (MWh), or $12.56/mmBtu at 0807 GMT.
The contract fell briefly to 38.50 Euros/MWh on Thursday, its lowest level since March 7.
The British front-month contract fell 0.69 pence to 95.08 pence a therm.
The British day-ahead contracts was down 0.73 pennies at 95.05 pence per therm.
The move by President Donald Trump to impose a 10% tariff for most goods imported into the United States as well as higher tariffs on dozens rivals and allies has intensified an international trade war which threatens to inflame inflation and stall economic growth.
Auxilione, a consultancy, said that major energy-intensive industries could change their future plans and this may impact on the amount of energy required in the future.
The report added that "Companies had already discussed in public the possibility of shutting down and reducing output as a response to the announcement on tariffs."
Auxilione stated that market participants also have to digest the news of an increase in oil production from May, which was higher than expected. Any potential relaxation of European Storage Targets may already be taking effect this year.
Daniel Hynes said that the drop in European gas price likely reflects expectations of a greater supply, due to higher tariffs on Chinese imports, which could divert more LNG to Europe.
He added that "risks of a weaker Chinese demand are also higher".
Analysts at Rabobank wrote in a report that despite the wider storage injection deficit this year, lower LNG demand in Asia by 2025 could have significant consequences for Europe.
They added that "Europe's benchmark gas price could fall to the low EUR30s in 2025" due to weak Asian LNG demand. However, they still forecast prices at the low EUR40s for the time being.
The benchmark carbon contract on the European market was down 0.26 euros at 65.80 euro per metric ton. It briefly fell to 65.33 euro/t - its lowest level since last December. (Reporting and editing by Susanna Twidale, Nora Buli)
(source: Reuters)
