‘Very warm’ winter can provide great relief for your gas bill

The European gas market may get a helping hand from the weather. More and more weather agencies expect an exceptionally soft autumn and winter, which can significantly reduce the demand for gas.

That would be a stroke of luck. Gas prices have been rising for weeks, while supplies are unusually depleted towards the heating season.

Europe's gas storage facilities are currently 67 percent full. Normally, this is 83 percent at this time of year, a gap of sixteen percentage points.

That backlog has everything to do with the Strait of Hormuz. Iran uses the strait as a means of pressure in the war with the United States, which has halted the export of liquefied natural gas (LNG) from the Middle East.

Traders are now trying to replenish the meager stocks at a rapid pace. As a result, the European gas price has shot up by more than 75 percent since the end of June. The Netherlands also feels this: the Dutch gas supply is no longer full in time, the Gasunie recently confirmed.

Commodity Weather Group is the strongest. The weather bureau expects one of the warmest autumns and winters ever measured in Europe, and the risks tend to be even less heating demand, according to meteorologist William Henneberg.

AccuWeather also expects warmer than normal weather. Atmospheric G2 sees temperatures that are about 1 to 2 degrees above average until the beginning of December and Vaisala calls the seasonal models for the winter “very warm”.

If it remains soft, there will be less gas from storage and Europe will have reserves for January and February. Several agencies point to the powerful El Niño, a periodic warming of the Pacific Ocean, although they differ on how great that influence is.

For households, soft weather works twice as well. The heating is less on, so the consumption decreases. At the same time, the price per cubic metre can also fall.

That's right: the current gas price includes a hefty premium for the risk that the gas will become really tight in February. If the winter remains soft, that fear decreases and the premium runs out of the price. Households with a variable contract will only notice this within a few months if they have a permanent contract upon renewal.

There is a brake on the decline. As long as Europe wants to replenish the surcharges, there will remain a large buyer in the market that supports the price.

Probably not. Almost all weather agencies do not see the greatest risk of cold until late in the winter. In addition, MetDesk sees an increased chance of a sudden warming of the stratosphere, a disturbance high in the atmosphere that can trigger cold outbreaks in Europe.

“We think the biggest cold risk for Europe is at the end of winter,” says meteorologist Amy Hodgson of MetDesk.

AccuWeather takes into account a short cold wave halfway or late in the winter. Commodity Weather Group puts the greatest risk even further away, towards March and April. If the cold does come so late, Europe will have months to replenish the half-empty stores.