European natural gas prices fluctuated as market participants awaited news on continued strikes in France, which have been disrupting the nation’s energy infrastructure alongside other supply risks.
(Bloomberg) — European natural gas prices fluctuated as market participants awaited news on continued strikes in France, which have been disrupting the nation’s energy infrastructure alongside other supply risks.
Benchmark contracts rose as much as 2.7% after earlier declines, with traders waiting for possible updates on labor action at three French liquefied natural gas terminals, originally set to end Tuesday. Companies in the region are also facing pressure to discontinue LNG shipments from Russia, with energy ministers in Brussels discussing possible options for countries to effectively ban them.
Europe’s official heating season is days away from drawing to a close after a mostly mild winter helped the region ride out an energy crunch that previously posed a risk of blackouts and squeezed supplies. Yet much of the continent will get hit by another cold spell next week, according to forecaster Maxar Technologies, which risks slightly prolonging heating demand.
“April overall is forecasted to be on the cooler side. This could be pivotal as to when we see countries pivot from net withdrawal, to net injection,” analysts at Zenergi Group said in a note.
Concerns about supplies are still contained, with storage levels remaining well above historical averages. But prices have fluctuated recently as traders weigh potential risks to flows, which will be important in preparing the continent for the next winter.
European Union energy ministers are meeting in Brussels Tuesday to discuss a range of policy issues, including giving members the option to prevent Russian LNG shipments without having to implement further energy sanctions. The EU also backed a plan to extend reductions in gas demand by a year, with a view to ensuring there’s enough fuel available next winter.
Volatility in the market is still elevated compared to historic norms and prices may fluctuate between €30 and €60 until the official start of the next heating season in October, said Frank van Doorn, head of trading at Vattenfall Energy Trading GmbH, at the European Gas Conference in Vienna. He added that the market hadn’t yet seen a significant rebound in consumption, while supplies are healthy and storage levels are high.
Dutch front-month futures, Europe’s gas benchmark, were up 0.7% at €42.81 a megawatt-hour at 4:01 p.m. in Amsterdam. The UK equivalent contract was up by 1.2%.
–With assistance from Elena Mazneva.
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