Europe’s Natural Gas Prices Surge To Record For Summer Season
Europe’s natural gas market is the most bullish it has been in years, as higher-than-expected summer demand and a tighter market drive natural gas price futures to levels last seen during this past winter’s supply crunch and to the highest for a summer season.
Natural gas prices are expected to stay strong and may still have room to rally, ahead of the next winter heating season in Europe that begins in October, analysts and traders tell Bloomberg.
Contrary to the typical summer lull in Europe’s gas prices, this year the front-month gas price in the UK—Europe’s biggest gas market—for example, is nearing the winter price from December 2017 when a deadly explosion in Austria’s gas hub at Baumgarten squeezed supplies throughout Europe. Immediately after the explosion, the price of gas for immediate delivery in the UK reached its highest level since 2013.
The past winter season in Europe was one of the coldest this decade, sending gas demand soaring and the level of natural gas stored in tanks across Europe dropping to below average levels.
Russia—which already supplies around one-third of Europe’s gas—boosted deliveries in the winter, and continued to ship higher volumes even after that, as gas importing countries were replenishing gas storage supplies that had been drained amid the cold snaps.
Come spring, demand in Europe stayed high. First, because gas storage levels were low, and second—because some of Europe’s other traditional gas-supplying countries decreased supplies over issues or maintenance at facilities.
Then summer came and with it a prolonged scorching heat wave across most of Europe for most of July and August. Demand for gas jumped again amid a tighter market and spot cargoes of liquefied natural gas (LNG) going mostly to Asia—China in particular—as sellers profit from selling their LNG on the Asian market where prices are higher than Europe’s.
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