As U.S. Tariffs take effect, the prices of gas in Europe will fall in line with those on other markets.
The Dutch and British gas price fell on Wednesday in line with the wider sell-offs of equity and commodities markets, as U.S. "reciprocal" tariffs took effect, which has raised fears about a recession.
LSEG data shows that the benchmark Dutch front-month contract fell by 1.07 euros, to 34.55 Euros per megawatt hour or $11.11/mmBtu at 0832 GMT.
On Monday, the contract reached 33.65 Euros/MWh, its lowest since September 2024.
The Dutch June contract is down by 1.20 Euros at 34.65 EUR/MWh.
The British day-ahead contracts was down 2.20 pence to 85.20 p/therm.
On Wednesday, President Donald Trump's "reciprocal tariffs" on dozens countries went into effect, including massive 104% duty on Chinese goods. This deepened his global trade conflict and sparked more widespread sales across the financial markets.
A trader stated that macroeconomic concerns about a possible recession and the impact of this on global gas demand are now the main drivers.
Analysts at ING stated in a recent market note that tariffs pose a downside risk for European gas demand, but also Asian demand for liquefied gas (LNG).
They added that it was difficult to quantify the risk at this time.
As the trade war continues, China will likely refuse to purchase U.S. LNG. However, other Asian countries and Europe may use the promise to buy more U.S. LNG to reduce their surplus in the U.S.
ING also added that Europe's need for gas storages to be filled to 90% by the end of summer in order to prepare for next winter was a fundamental factor.
The European Union is also seeking additional flexibility in the gas storage refilling process, allowing deviations of up to ten percentage points from their target to avoid the need for refilling driving prices unnecessarily higher.
Gas Infrastructure Europe data shows that Europe's storage sites for gas reached a low of 33.6% at the end this winter and last saw them at 35%.
The benchmark contract on the European carbon markets was down 1.51 euros, at 60.55 euro per metric ton. Nora Buli, reporting from Oslo; Vijay Kishore, editing)
(source: Reuters)
