Gas prices in Europe fell to a two-year low.

The European natural gas market continues to experience price declines, hitting a XNUMX-month low as benchmark natural gas prices declined for the sixth week in a row on Monday. The reasons for the fall were comfortable stocks and weak demand for fuel in Europe and Asia.

Prices for futures for the next month at the European gas hub TTF fell to $400 per thousand cubic meters. After a mild winter, gas stocks in Europe at the end of the 2022/2023 heating season were well above the five-year average. According to Gas Infrastructure Europe, as of May 6, storage facilities in the EU were 61,40% full. At the moment the trades are conducted at the level of 410 dollars per thousand cubic meters of natural gas.

Spot LNG prices in North Asia also fell to a two-year low due to low demand from major buyers in China, Japan and South Korea. If the Chinese economy recovers and demand for LNG rises, Europe may have to compete with the Asian market for spot supplies at higher prices.

A long-term drop in gas prices is causing a reduction in exploration, drilling and rig installation. This could lead to less investment in LNG infrastructure and slower production of raw materials. Nevertheless, such a situation suits Europe quite well and, probably, European investors will seek further reduction in the cost of gas.