(Bloomberg) -- Natural gas prices in Europe headed for the longest streak of weekly gains this year as a prolonged shutdown of a key export facility in the US further tightens a market that’s already reeling from Moscow’s supply cuts.
Benchmark futures rose as much as 6.1% to head for a third week of increases. The Freeport LNG project now plans to resume partial operations in October, a month later than previously expected. It’ll put further strain on European companies and governments to secure enough supply to fill storage sites in time for winter, while continuing to fight off the risk of blackouts.
Also read: US Gas Posts Biggest Monthly Drop Since 2018 on Plant Shutdown
Europe has been in the middle of an energy crisis for months, which is playing a huge part in slowing down economic growth and driving up inflation. Russia has reduced shipments through a major pipeline by 60%, and the link is scheduled for a full shutdown this month for maintenance. Germany has raised doubts that the Nord Stream will resume supply following the works.
Dutch front-month gas futures, the European benchmark, were 1.7% higher at 147 euros per megawatt-hour as of 8:42 a.m. in Amsterdam. They earlier rose to the highest intraday level since March 10.
The Freeport facility in Texas was shut in early June following an explosion. The project makes up about 15% of all US exports of the fuel, including to Europe. Before normal operations can resume at the facility, Freeport must take a series of corrective actions and provide weekly updates, according to a federal notice Thursday. Full production is likely only by the end of the year, the project’s operator said.
The supply risks are spreading through the European economy and putting increasing stress on traders and utilities by boosting their funding requirements. German energy giant Uniper SE is seeking a bailout from the government as it has been forced to buy more expensive gas from the spot market to make up for shortfall from Russia.
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