European natural gas advanced, after fluctuating earlier, with traders weighing rising fuel stockpiles against the risk of further supply constraints.
(Bloomberg) — European natural gas advanced, after fluctuating earlier, with traders weighing rising fuel stockpiles against the risk of further supply constraints.
Benchmark futures rose as much as 3.2%, reversing an earlier decline. Competing drivers such as tepid demand and busy maintenance schedules among producers have kept uncertainty in the market, which is still recovering from last year’s energy crisis. Adding to some signs of bullishness, gas flows into a key export terminal in the US fell on Tuesday, indicating a possible outage.
Still, the European Union’s fuel inventories are more than 87% full — the highest level on record for this time of year, and just shy of the block’s mandatory target to have 90% by November, which is helping to keep a lid on prices. Some member states have already exceeded that level, including Spain and the Netherlands, while Germany and Italy are closing in.
France is among outsiders, with storage levels at 78%, after energy supplies to the country were disrupted for several weeks earlier this year by nationwide strikes. Compared to long-term historical averages, the country isn’t experiencing delays — it’s just lagging other EU members that have fuller-than-normal stockpiles.
“Record-high gas storage should soften any bullish drivers,” analysts at Alfa Energy Ltd. said in a weekly note. Those include worries about dwindling LNG flows, after Europe’s imports of the fuel dropped recently to their lowest level since 2021.
The continent still faces the risk that global competition for gas cargoes could intensify later this year. US exports of LNG are currently more profitable to Asia in September, October and November, according to BloombergNEF. On top of that, LNG supply may tighten this month, BNEF estimates.
Read More: Europe Loses LNG Price Premium Over Asia, Lowering Imports
Dutch front-month futures, Europe’s gas benchmark, traded 3.1% higher at €31.45 a megawatt-hour by 4:25 p.m. in Amsterdam. The UK equivalent added 2.6%. Both contracts jumped the previous day.
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