European natural gas prices rise as winter booms in demand

(Bloomberg) – European natural gas prices rose for a third session as unusually cold weather across the northern half of the continent tests Europe’s resilience to a historic energy crisis. .

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Benchmark futures jumped as much as 6.5% after ending Wednesday at their highest since mid-October.

Forecasts show that, from London to Latvia, temperatures will drop below freezing in the coming days and show little sign of cooling down. This is the first real test of the season for Europe’s strained gas and electricity grid, with wind power falling and nuclear output in Sweden and France struggling due to power outages.

Read: Arctic blast to test Swedish power grid as nuclear plant shuts down

Ole Hansen, head of commodity strategy at Saxo Bank A/S, said: “It was all due to the cold spell boosting heating demand and clear skies suggesting lower wind activity and dependence. more on gas.”

The continent’s gas storage levels have fallen to around 90% full, from nearly 96% in mid-November, according to data from European Gas Infrastructure. The cold wave coincided with additional power outages at facilities in Norway.

However, Europe is importing record amounts of liquefied natural gas as lower pipeline flows from Russia exacerbate the crisis. Traders are also closely monitoring activity in China, where the easing of Covid-related restrictions has reduced energy demand. Freezing in Asia could increase international competition for LNG.

“Germany currently has one of the highest LNG prices, and that has helped attract the commodity,” said Peter Heydecker, managing director of trading at German energy company EnBW. “We have huge demand right now, but we compete globally. We still see enough LNG coming, but that could quickly change and we need to keep an eye on Asian demand.”

Last month’s Dutch futures, the European benchmark, traded 4.5% higher at €156 per megawatt hour at 10:04 a.m. in Amsterdam. The UK equivalent contract is up 5.4%.

–With support from Vanessa Dezem.

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