(Bloomberg) -- European power prices jumped to their highest this year as Russia expanded gas cuts, potentially limiting supplies of the fuel for electricity generation. 

German 2023 power, a benchmark in Europe, surged above 250 euros ($260) a megawatt-hour after Russia curtailed deliveries via the Nord Stream pipeline. Germany’s energy regulator urged consumers and industry to scale back their consumption of natural gas to help fill storage sites before next heating season.

“Volatility should remain high today due to the gas supply situation and we expect another very bullish session,” Energi Danmark said in a note on its website.

A heat wave moving through Europe these next few days is boosting demand for cooling, but peak consumption will come from heating in winter. Disruptions to supplies now could make filling gas storage tanks more difficult, raising the threat of rationing for industries across Europe.

If the situation continues, “gas storage levels would likely stay below their five-year seasonal norm throughout next winter, extending last year’s demand-supply imbalance and forcing a partial pivot to alternative fuels for power generation,” said Patricio Alvarez, an analyst at Bloomberg Intelligence.

Europe’s gas-storage levels are 52% full as of June 16, with individual countries varying significantly. Poland sits on top at 96% full, and Sweden is at the bottom at 10% full, according to BI data.

The high prices may lead to demand destruction from energy-intensive users such as the steel, cement and chemical manufacturing businesses. Lower output likely would hit economies, adding to inflation and driving the prospects for a recession next year. 

Power for the first quarter next year jumped 16% in Germany to 336 euros, while the equivalent in France advanced 6.3% to 560 euros on the European Energy Exchange AG.

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