Gas prices in Europe have risen, attributed to a sharp reduction in supplies from Norway. The main reason for this is the scheduled maintenance at the Kollsnes gas processing plant, which has significantly decreased export volumes. Last year, Norway accounted for about a third of the European Union’s gas imports.
This is reported by Finway
Impact of Maintenance on the Market
Gas futures contracts in Europe surged by 1.2%, as the start of seasonal work in Norway created uncertainty in the market. Dutch futures for the upcoming month increased by 1.1%, reaching €36.16 per megawatt-hour.
Demand and Factors Influencing Prices
Traders are currently focused on ensuring adequate supplies in underground gas storage facilities. The market is also closely monitoring the situation regarding customs restrictions in the U.S. and the ongoing war that Russia is waging against Ukraine. Despite these factors, weak demand in China allows for increased supplies of liquefied natural gas (LNG) to Europe, which mitigates the risks of shortages during the summer period.
Supplies of liquefied natural gas to European networks are increasing, helping to significantly narrow the gap in inventories compared to the previous year, noted analyst Patricio Alvarez.
The analyst predicts that by the end of the year, the price in the European gas market will remain around €35 per megawatt-hour. Among the additional factors influencing the situation, he mentioned reduced targets for filling storage, subdued domestic demand, and limited LNG imports to China. This reduces pressure on European supplies, even considering that liquefied gas production in the U.S. and gas export volumes from Norway have temporarily decreased due to technical work.