Europe welcomes another mild winter, will natural gas prices continue to be under pressure?

This year, Europe may soon experience a glut of natural gas as another warm start to winter delays heating demand. Data from the Copernicus Climate Change Service, the European Union's climate monitoring agency, shows that temperatures are set to be above normal in October after the recent heat wave, and weather in Western Europe is likely to remain mild in the coming months.

The milder weather will help ease concerns about supply risks that have emerged around the world in recent weeks, as the region prepares to survive a second winter without large supplies of Russian gas.

October is usually the start of Europe's heating season, but last year's warm weather extended the time it took for gas storages to fill, creating a vital buffer against the colder months. The continent's gas storage levels currently stand at 94%, and delays in heating demand will also reduce options for storing the fuel via pipelines or tankers.

This could put pressure on gas prices, especially for short-term deliveries. Natural gas prices are currently well below the records set last year when the conflict between Russia and Ukraine roiled the market.

Citigroup strategist Anthony Yuen said: "Prices are still likely to fall sharply in the next few weeks. And the price decline will be intensified in late winter."

The Copernicus Climate Change Service said winter across Europe is likely to be warmer and wetter than average. Data from the agency shows that there is more than a 50% chance that temperatures will be significantly above average in parts of the UK, France, Austria, Italy and Germany between December this year and February next year. There is a greater chance of mild weather in the Iberian Peninsula.

Meteorologist Amy Hodgson of AtmosphericG2 said forecasts for the rest of the month and into October showed warming across the continent, with the highest temperature anomalies in the east.

European natural gas prices have fallen by about 80% over the past year, and supplies appear to remain abundant in the region, even as risks such as strikes in Australia and extended maintenance periods in Norway keep the market on edge. Goldman Sachs said large inventories meant there was a lower risk of a price surge ahead of winter.

Labor disputes at Chevron's (CVX.US) Gorgon and Wheatstone liquefied natural gas plants in Australia escalated as workers stepped up strikes on Thursday. Still, they are unlikely to cause long-term disruption, Goldman Sachs said.

But even during a mild winter, any supply disruption has the potential to cause a temporary spike in prices. Unexpected outages at the U.S. Freeport LNG plant and extended maintenance at a Norwegian natural gas plant - although these are short-term issues - have added to market volatility this week.

Ample supply is also an opportunity for traders. Tight storage, reduced short-term demand and contango in the futures market (contracts for later delivery are more expensive) are prompting them to store more LNG on tankers. The level of so-called floating storage is already higher than at this time in previous years, but it is still well below last November's record.

"We expect more floating storage ahead of the heating season," Richard Tyrrell, chief executive of LNG shipowner Cool Co., told a conference in London on Tuesday.

Despite rising shipping costs, it's proven to be a pretty lucrative deal. Matt Drinkwater, a consultant at ArgusMedia, said delaying delivery of cargo loaded in October until December would generate a profit of about $12 million for cargo owners.

But while there are still tankers available that can store natural gas, they are typically only available for a month or two at a time, in part because of the cost of leasing the vessels and the natural loss of this super-cooled fuel over time.

Weak demand in Europe could lead to more cargoes being diverted to Asia, especially as China replenishes stocks for winter and supplies attract price-sensitive buyers such as India. Elsewhere in the Americas, demand for LNG is supported by reduced rainfall in Colombia and Brazil due to El Niño, threatening hydropower capacity.

But on the other hand, Europe is likely to add more LNG terminals in the near future – opening the door to additional imports if needed.

Jonathan Brearley, chief executive of UK energy regulator Ofgem, told a parliamentary committee hearing this week: "The situation is certainly much more stable than last year. I don't think we are in the same situation as last winter. Frankly, everything that needs to be done is being done."