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European benchmark gas futures have been stuck in a downtrend for several months, as a mild start to winter and brimming EU stockpiles have whittled away bullish sentiment. The EU supplemented its own inventories with additional storage facilities Ukraine for the first time in 2023, compounding a record-breaking pace of accumulation in the bloc’s local stocks. Europe’s new reliance on seaborne LNG shipments, as part of its shift away from Russian pipeline gas, was powerful enough to make the US the world leader in LNG exports. 

Despite the EU’s haste to fill its gas stocks last summer, this winter heating season was very mild early on. That may be about to change, however, as artic weather gripping Scandinavia has begun to drift southward. Freezing temperatures are now expected in Paris, Berlin, and beyond this weekend, likely to put the first real drain on Europe’s gas stocks in some time.

Related ETF & Futures: United States Natural Gas Fund, LP (UNG), Natural Gas EU Dutch TTF

European benchmark Dutch TTF natural gas futures dipped to a near five-month low under €30.60 per megawatt hour (MWh) to start the year, continuing a downtrend that took hold in October. Gas prices had risen steeply throughout the summer and early autumn on concerns that Europe would struggle to deal with a steep and continual drop-off in pipeline gas supplies from Russia – a catalyst that shot TTF prices up to an all-time high near €340.00/MWh in third quarter of 2022. Since then, however, Europe has managed to successfully fill the gaps left by the elimination of their dependence on Russian gas.

Per Reuters, natural gas supplies to Europe by way of Russian energy giant Gazprom were down by -55.6% to 28.3 billion cubic metres (bcm) in 2023. That compares to the 63.8 bcm received in the prior year, and up to 180.0 bcm in peak years – largely by way of the now defunct Nord Stream gas pipeline. Following the European Union’s (EU) enactment of pledges to diversify their energy imports away from Russia, as well as the outright sabotage of Nord Stream 1 and 2, many European nations now rely heavily on seaborne shipments of liquefied natural gas (LNG) to power the grid and shore up their stockpiles for winter. Europe has become particularly reliant on the United States for LNG shipments, which helped boost…

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