European natural gas prices eased on signs of lower supply risks in Norway and Australia.
(Bloomberg) — European natural gas prices eased on signs of lower supply risks in Norway and Australia.
Benchmark futures pared losses after dropping as much as 6.1%. Chevron Corp. and unions are close to a regulator-brokered deal to end strikes at liquefied natural gas export facilities in Australia as soon as Friday.
Uncertainty over the strikes’ impact on LNG flows globally has weighed on the market for weeks, threatening to cause disruptions just ahead of Europe’s winter demand season. Prolonged maintenance in Norway, the continent’s biggest supplier, has been another source of nervousness.
Norwegian flows are gradually recovering. Gas capacity at the giant Troll field is ramping up after repeated delays, according to network manager Gassco AS. However, works on the on network that delivers supplies to a terminal in the UK are taking longer than planned.
The front-month gas contract on the Dutch hub fell 1.4% to €36.78 a megawatt-hour at 12:46 p.m. in Amsterdam. The UK equivalent contract also declined.
The return of supplies takes place against a backdrop of European inventories and lackluster demand, which hasn’t fully recovered from the energy crisis sparked by Russia’s war in Ukraine.
“A number of industries have seen their business plan broken in a way,” according to Gergely Molnar, a natural gas analyst at the International Energy Agency. An easing of gas prices “does not necessarily translate into a recovery in industrial gas demand,” he said at an International Gas Union press briefing.
European storage sites are about 94% full on average, providing a substantial buffer against winter risks, including extremely cold weather and greater competition with Asia for LNG.
Germany, the region’s largest economy, is conducting a test Thursday to make sure it is prepared for the possibility of a gas shortage this winter. The nation has amassed healthy stockpile levels and expanded its ability to receive LNG since the height of the crisis.
“Germany is much better prepared for this winter than last year,” said Klaus Mueller, president of the regulatory Federal Network Agency, in a statement. “We can certainly be optimistic, but it is still too early to sound the all-clear.”
–With assistance from Iain Rogers.
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