By Ketki Saxena
Investing.com -- The European natural gas market is facing a mixed outlook for demand against supply risks, including outages and competition with Asia for liquefied natural gas (LNG). Benchmark Dutch futures have been trading near €40, set to decline for the third consecutive week. Industrial demand has been low in recent months as Europe recovers from an energy crisis.
Stockpiles remain about 57% full on average, well above usual levels at this time of year.
Weak demand, high inventories, and near-record LNG imports have helped keep prices within their current range. However, there are short-term risks such as Norway's giant Troll field reducing supplies starting this weekend due to seasonal maintenance.
A forecast for cooler weather in northern Europe could boost heating demand while competition with Asia for LNG remains in focus. India is looking to procure more fuel from abroad as a heat wave pushes the nation’s power demand to record levels.
Cheaper gas prices have incentivized burning it in power generation rather than coal which has seen lower usage numbers compared to last year. For example, German coal usage is expected to fall by 2.7% from January through July compared with last year. Overall the combination of these developments leaves the market wondering whether EU storage sites can be filled before September - a development that potentially could send spot prices even lower.