European natural gas prices headed for the longest stretch of daily gains in over a month as ongoing strikes in France raise supply risks amid a looming cold snap across much of the continent.
(Bloomberg) — European natural gas prices headed for the longest stretch of daily gains in over a month as ongoing strikes in France raise supply risks amid a looming cold snap across much of the continent.
Benchmark futures advanced as much as 6.3% for a third day of gains. Frequent bouts of chilly weather have kept concerns about demand alive even though the winter has been mostly mild. A colder-than-normal start to April could prolong the heating season, and add pressure to the market just as supply worries are mounting with protests in France hitting nuclear power output, and blocking liquefied natural gas terminals and oil refineries.
“While tensions on the European gas market considerably moderated since the start of the year, we are not out of the woods yet,” said Gergely Molnar, gas analyst for the International Energy Agency, at the European Gas Conference in Vienna.
The continent has nonetheless seen out an energy crisis over the winter that was threatening to overwhelm the economy. Stockpiles are far fuller than normal for the time of year and overall LNG imports continue to be strong. Still, officials are warning the squeeze may not yet be over as the critical period of replenishing those storage sites begins — this time without significant pipeline flows from Russia.
Read: Next Chapter in Europe’s Energy Crisis — Summer Risks for Gas
There’s also evidence that some gas demand is returning following the decline in prices from their peaks last year. European Union energy ministers this week agreed to extend a voluntary 15% cut in consumption by a year until March 2024 as the bloc seeks to ensure there are no shortages. Prices may need to be at least €60 per megawatt hour for demand cuts to continue, according to analysts at SEB AB.
Dutch front-month futures, the benchmark for Europe, were 1.3% higher at €43.30 per megawatt-hour by 11:34 a.m. in Amsterdam. The UK equivalent contract rose 0.8%.
Strikes at three French LNG terminals operated by Elengy SA have been extended until Thursday. The facilities have already been blocked for three weeks. Electricite de France SA also continues to experience issues with its nuclear reactors, with only 57% of capacity available, according to Bloomberg calculations.
–With assistance from Elena Mazneva and Lars Paulsson.
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