European gas prices are already near the lowest levels in a decade, and they could fall further in the near term as local gas markets near the point of saturation. Buyers are not only well-stocked with gas from traditional pipeline suppliers such as Russia and Norway but are also receiving LNG from the U.S. and other newcomers, Bloomberg reported on September 3.
Because of this influx, European storage depots are set to be filled to capacity before the end of September. This is unusually early; gas inventories usually reach this level in October, closer to the start of the heating season.
Norbert Ruecker, the head of economics at Julius Baer Group, argued that these conditions were certain to drive gas prices down, unless European buyers reduced the volume of gas imported by pipeline and tanker. But Ahmed Hammoudan, a senior gas trader for the Dutch energy firm Eneco, expressed doubts about the efficacy of such a move.
“Big suppliers are not driven by price, but by revenue,” he told Bloomberg. “Even if prices collapse, they might not be under pressure to reduce flows as they hedge operations. And these companies want to deliver volumes.”