European benchmark natural gas prices rose on Friday amid signals from China that it considers engaging in trade talks with the United States.
A de-escalation of the tensions drove markets higher at the end of the week as traders and analysts weigh the possibility of less disruptive trade and lower impact on the economy. Over the past month, European gas prices have slumped by 20% on warmer spring weather and higher wind and solar output, but also due to concerns that an escalating U.S.-China trade war would hit global demand for commodities, including oil and gas.
On Thursday, China said it is evaluating U.S. offerings to start negotiations on tariffs.
China weighs possible trade talks but continues to call on the United States to remove all unilateral tariffs. The U.S. failing to do so would suggest “an outright lack of sincerity” from Washington and could “further compromise mutual trust,” according to a CNBC translation of comments by a spokesperson for the Chinese commerce ministry.
Dutch TTF Natural Gas Futures, the benchmark for Europe’s gas trading, rose by 2.2% at $37.25 (32.85 euros) per megawatt-hour (MWh) as of 11:55 a.m. in Amsterdam on Friday.
At the end of the winter heating season, Europe had its natural gas storage sites depleted to levels last seen three years ago as a cold winter and low renewable energy output, with low wind speeds and little sunshine, forced countries to use more gas than in the past three winters.
Traders and analysts will be watching closely the pace of storage refills in the coming months, as well as LNG demand in Asia and whether North Asian demand would rise and potentially compete for spot cargoes with Europe.
Unlike in the previous months, Europe’s gas prices for the summer are currently lower than those for the next winter, encouraging stockpiling.