European energy prices jumped amid concerns about France’s nuclear fleet and disruptions due to strikes throughout the country, along with a late-winter cold blast in other parts of the region.
(Bloomberg) — European energy prices jumped amid concerns about France’s nuclear fleet and disruptions due to strikes throughout the country, along with a late-winter cold blast in other parts of the region.
Benchmark gas futures spiked as much as 11% on Friday, putting them on track for a weekly gain. French and German power futures also advanced.
Worker strikes this week have upended operations at energy facilities in France, affecting prices elsewhere on the continent. The nation is also struggling with fresh constraints on its nuclear output. At the same time, unusually cold weather is prolonging heating demand in northern Europe.
There’s been “quite a bit of pressure on infrastructure due to the strikes in France, removing some of the flexibility” from the market, said Jacopo Casadei, a gas analyst at Energy Aspects Ltd.
The nation’s four liquefied natural gas terminals remain blocked by the labor action, which is currently expected to continue until March 14. Workers at Electricite de France SA also plan to strike again starting that date for 24 hours. That’s likely to curb power production by the utility, adding to market tremors.
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Separately, EDF discovered new defects at two of its nuclear reactors that were halted for maintenance and repairs, renewing concerns that its electricity output will remain largely constrained this year after plunging in 2022.
Even though Europe has higher-than-normal gas inventories to cope with short-term supply disruptions, this week’s events serve as a reminder of the continent’s fragile energy situation since it was largely cut off from Russian pipeline gas. Traders are also watching demand for liquefied natural gas in Asia, Europe’s key competitor for the vital fuel.
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Benchmark Dutch front-month gas futures traded 5.4% higher at €45.95 per megawatt-hour by 11:13 a.m. in Amsterdam. French year-ahead power rose by 4.2%, while the German equivalent also gained.
Britain resumed gas exports to mainland Europe through its interconnector with Belgium, after flows were halted for a few days amid outages in the UK. Its month-ahead gas futures also advanced on Friday.
“The current cold spell in northern and western Europe has put an at least temporary hold to the price falls on the European gas market,” analysts at trading firm Energi Danmark A/S said in a note. “Gas demand could increase with new problems with the French nuclear reactors.”
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