Gas prices maintain 1-month lows as U.S. tariffs threaten demand
Dutch and British gas prices weakened on Friday morning and are trading near their lowest levels since early March over concerns that the global trade war sparked by U.S. tariffs could cut industrial activity and curb gas demand.
The Dutch front-month contract was down 0.48 euro at 39.00 euros per megawatt hour (MWh) or $12.56/mmBtu, by 0807 GMT, LSEG data showed.
On Thursday, the contract briefly fell to 38.50 euros/MWh, the lowest since March 7.
The British front-month contract was down 0.69 pence at 95.08 pence per therm.
The British day-ahead contract was down 0.73 pence at 95.05 p/therm.
President Donald Trump's move to slap a 10% tariff on most goods imported to the United States, as well as much higher levies on dozens of rivals and allies alike, has intensified a global trade war that threatens to stoke inflation and stall growth.
Major energy intensive industries may change future plans which could impact the amount of energy they need in the future, consultancy Auxilione said.
"Companies were already publicly discussing potential shut downs and reductions in output in response to the tariff announcement," they added.
Market participants are also having to digest news of a higher-than-expected oil output hike from May and that any potential relaxation of European storage targets may already take effect this year, Auxilione said.
The drop in European gas prices likely also reflected expectations of greater supply due to relatively higher tariffs on Chinese exports potentially diverting more LNG to Europe, said Daniel Hynes, senior commodities strategist at ANZ.
"Risks of weaker demand in China are also higher," he added.
Lower LNG demand in Asia in 2025 versus 2024 could have significant implications for Europe, despite its wider storage injection gap this year, analysts at Rabobank said in a note.
"With weak Asian LNG demand, Europe's gas benchmark price could drop to the low EUR 30s in 2025," they added, but maintained their forecast for prices in the low EUR 40s for now.
In the European carbon market, the benchmark contract was down 0.26 euro at 65.80 euros a metric ton and briefly hit 65.33 euro/t, its lowest level since December.
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