European natural gas prices climbed on Friday after China hinted it might enter trade talks with the United States.
This easing of tensions boosted markets at week’s end. Traders and analysts see a chance of less disruption to trade and a smaller economic impact. Over the past month, European gas prices fell by 20%. This was due to warmer spring weather, higher wind and solar power, and worries that a worsening U.S.-China trade war would reduce global demand for commodities like oil and gas.
On Thursday, China said it is reviewing U.S. proposals to start negotiations on tariffs. However, China still insists the U.S. must remove all unilateral tariffs. If the U.S. does not, China warned this would show “a lack of sincerity” and damage trust, according to a CNBC translation of a statement from China’s commerce ministry.
Dutch TTF Natural Gas Futures, Europe’s main gas benchmark, rose 2.2% to $37.25 (32.85 euros) per megawatt-hour by midday Friday in Amsterdam.
Europe ended the winter heating season with gas storage levels at their lowest in three years. A cold winter and weak renewable energy output—due to low wind and little sun—forced countries to use more gas than in recent winters.
Traders will closely watch how fast gas storage refills in the coming months. They will also monitor demand for liquefied natural gas (LNG) in Asia and whether rising demand in North Asia will compete with Europe for spot cargoes.
Unlike recent months, Europe’s summer gas prices are now lower than prices for next winter. This price gap encourages stockpiling ahead of the colder months.
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