(Bloomberg) -- European natural gas prices rose on geopolitical risks to supply and a forecast for colder weather ahead of the heating season.
Benchmark futures climbed as much as 5.5% on Monday, after ending last week down 3.4%. The market has been volatile amid heightened Middle East tensions, with Israel stepping up air strikes against Hezbollah in southern Lebanon. Israeli gas fields help meet domestic demand and also supply neighbors Egypt and Jordan.
Meanwhile in Ukraine, whose pipes transit Russian gas to central Europe, threats to energy infrastructure persist. Moscow may be planning strikes on nuclear sites, Ukraine’s foreign minister said. Russia is also working to drive Kyiv’s forces out of the Kursk region — where the Sudzha gas-transit point is located.
Following last week’s dip, “markets have returned to their ‘as they were’ levels as attacks on the Ukraine-Russia border continue,” consultancy firm Auxilione said in a note.
In Norway, Europe’s largest supplier, several unplanned outages are compounding the impact of seasonal works at gas facilities. And in the US, flows to the Cove Point liquefied natural gas export terminal slumped over the weekend, coinciding with scheduled maintenance.
EUROPE GAS OUTAGES: Gullfaks, Sleipner, Asgard, Skarv See Cuts
On the demand side, temperatures in parts of Europe are set to drop below seasonal norms through the start of October, potentially boosting gas use for heating.
The period “undergoes cooler adjustments from prior with below normal temperatures being widespread across the West and Central,” Maxar Technologies Inc. said in a note on Monday.
Dutch front-month futures, Europe’s gas benchmark, advanced 4.9% to €36.13 a megawatt-hour as of 5:30 p.m. in Amsterdam.
--With assistance from Elena Mazneva.
©2024 Bloomberg L.P.
