Some European short-term natural gas prices could briefly dip below zero this summer if sluggish demand doesn’t catch up with a growing supply glut, Bloomberg reported.
Such an event - where producers effectively pay someone to take their gas - is looking ever more possible with prices collapsing to pre-crisis levels, according to traders at the annual E-World energy fair.
European gas stockpiles are above seasonal norms at about 66% full, and some expect storage sites to be topped as early as August, long before the start of the heating season. At the same time, lower prices are yet to revive industrial demand, with some buyers delaying gas purchases until market rates fall even further.
While rare in gas markets, negative gas prices are increasingly frequent in electricity trading, and strong wind generation during a low-demand weekend can easily push rates below zero. It’s much more volatile than other commodities because there isn’t yet a solution for storage on an industrial scale.
If none of the bullish factors materialize, then for a few days prices may fall below €10 a megawatt-hour.
