European Gas Prices Rise for Third Week in a Row – Bloomberg
Bloomberg writes that European gas is demonstrating a weekly increase in price, and the risks associated with its supply are shaking the market.
Natural gas prices in Europe rose for a third week in a row , the agency said, as the market grappled with declining inventories and supply constraints following the loss of Russian flows through Ukraine.
Benchmark futures ended the week 4% higher after paring earlier gains, with prices near a 14-month high of around 50 euros per megawatt hour.
The New Year's shutdown of Russian gas supplies via Ukraine comes as gas reserves in storage facilities are falling at the fastest rate since the 2022 energy crisis.
The weather in Europe is also getting colder, which could spur further gas extraction, the agency predicts.
"The region's vast underground storage facilities are now about 72% full, compared with 86% at the same time last year. While the risk of immediate shortages in Europe is low, the tight supply picture this winter will make stockpiling more challenging ahead of the next heating season," the publication said.
“The increased demand for gas to be put into storage will keep markets high in the coming months,” said Florence Schmitt, European energy strategist at Rabobank.
"The continent is now increasingly exposed to market volatility as it becomes even more dependent on global liquefied natural gas to fill the gap created by the shutdown of Russian gas supplies through Ukraine," the expert said.
It is noted that the price change coincided with interruptions at Norway's Hammerfest LNG plant, which was suspended until January 9 due to a compressor failure. Any disruptions at global LNG export plants could lead to increased price fluctuations.
“The global gas balance remains tight and lacks the flexibility to absorb any significant impact of market tightening, so significant price increases are possible in the coming weeks,” said James Waddell, head of European gas and global LNG at Energy Aspects.
In the long term, prices should fall as supply increases in the market, including a potential resumption of supplies through Ukraine, which market players are still hoping for, according to Citigroup Inc. analysts including Anthony Yuen.
“We are mindful of the unpredictability of the outcome of the negotiations, particularly when it comes to politics, geopolitics and relations between Russia and Ukraine, but economic incentives suggest a possible resumption of supplies,” the analysts wrote in a note.
European Gas Prices Rise for Third Week in a Row - Bloomberg