(Bloomberg) -- European natural gas prices gained for a second day as traders increased the pace of withdrawals from storage sites during the first major cold snap this winter.
Benchmark futures rose as much as 4.4% on Thursday. While European Union reserves are at a healthy 93%, withdrawals since the end of November have been higher than the same period last year, according to data from Gas Infrastructure Europe.
Most analysts now expect end-of-winter inventories in Europe to drop below this year’s levels, indicating more of a challenge next summer to refill the sites. That’s likely to support prices beyond the winter season too.
Read More: Cold Snap Hits Europe, But Consumers Keep Saving Gas: BNEF Chart
With the worst of the energy crisis now in the past, storage levels are playing an instrumental role as a key indicator of where prices are headed, along with the level of liquefied natural gas imports and curbs in consumption. The surging Norwegian flows are also closely watched by traders.
The attention is also on demand recovery in China in November, which could “place more buying pressure over the winter on LNG supply,” according to consultancy Zenergi. The price gap between Europe and Asia has widened, with US LNG currently more profitable in Asia, according to BloombergNEF.
The current cold snap is poised to ease by the weekend, with temperatures in Germany moving from below normal levels to as much as 6.6C above average in Frankfurt on Monday, according to forecaster Maxar Technologies.
Dutch front-month futures, Europe’s gas benchmark, added 2.47% to €40.28 a megawatt-hour at 5:02 p.m. in Amsterdam.
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