Natural Gas Gets Little Winter Love Amid Balmy U.S., Summer-Like Europe

 | Jan 05, 2023 04:44AM ET

  • Unseasonable temperatures for the U.S. over the next fortnight, could stretch to February
  • Switzerland, Poland, Hungary, France and Germany also see warmer-than-usual weather 
  • Weekly U.S. gas storage due today could be bullish due to strong late Dec heating draw 

    • Gas bulls’ worst fears may have come true: Two weeks into the winter, and the U.S. feels like it’s in mild fall. Those in Europe, meanwhile, could be excused for thinking that the summer never went away.

    Blame it on global warming or Vladimir Putin’s aspirations for a European freeze that has yet to happen. Whatever the case, natural gas, the primary fuel for heating in most Western countries, is getting little love at this time of the year on both sides of the Atlantic due to unseasonably high temperatures.

    Hundreds of sites in Europe, from Switzerland to Poland, have seen their winter temperature records go awry in the past fortnight. Hungary registered its warmest Christmas Eve in Budapest and saw temperatures climb to 18.9 degrees Celsius (66.02°F) on Jan. 1.

    In France, where the night of Dec. 30-31 was the warmest since records began, temperatures climbed to nearly 25°C in the southwest on New Year’s Day while normally bustling European ski resorts were deserted due to a lack of snow.

    The Weather Service in Germany, where temperatures of over 20°C were recorded, said such a mild turn of the year had not been observed in the country since records began in 1881.

    Czech Television reported some trees were starting to flower in private gardens, while Switzerland’s Office of Meteorology and Climatology issued a pollen warning to allergy sufferers from early blooming hazel plants.

    The temperature hit 25.1°C at Bilbao airport in Spain’s Basque country. People basked in the sun as they sat outside Bilbao’s Guggenheim Museum or walked along the River Nervion. Bilbao resident Eusebio Folgeira, 81, said in comments carried by Reuters: “It always rains a lot here, it’s very cold, and it’s January, (but now) it feels like summer.”

    In the United States, forecasters said expectations are high for unseasonably warm weather to continue into next week and the week after that – potentially stretching into February.

    The result is a price plunge in gas futures, with an intensity not seen in a while. On the New York Mercantile Exchange’s Henry Hub, they tumbled beneath the $4 marker to touch lows not seen in almost a year.

    In Europe, benchmark Dutch gas fell below $75 — down more than 50% from a month ago and plumbing a trough not seen before the start of the Ukraine war in February.
    Europe’s natural gas storage surplus versus the five-year average is hovering near 549 billion cubic feet -- or bcf.

    European gas storage stocks remained above 80% capacity in the first week of January. Should this trend continue, European inventories could remain so well supplied that they might negatively impact U.S. exports of liquefied natural gas, or LNG, to the E.U.