Gas prices soar as flows dip from key markets
European gas prices have spiked again this morning amid both lower flows from Norway and Russia, and weak wind output.
Dutch and UK benchmarks were up nine and eleven per cent respectively, with fears of supply shortages continuing to drive up prices.
The British gas system is currently under-supplied by approximately 11m cubic metres (mcm), with flows forecast at around 208 mcm per day and demand forecast at 219 mcm, according to National Grid data.
Flows through the Langeled pipeline, which connects the UK to Norway, were also down 4 mcm at 17 mcm/day.
Meanwhile, Nordstream 1 flows from Russia to Europe are lower than usual at 51,987,834 kilowatt hours per hour.
Russia puts pressure on West with gas cuts
Wind output in Britain and north-west Europe is also low, increasing gas-for-power demand, however wind speeds are expected to recover towards the weekend and next week.
Nevertheless, the news of low wind could spook investors, with underperformance in wind generation exacerbating supply shortage concerns last winter, when Europe relied chiefly on US liquefied natural gas to stave off supply shortages.
Refinitiv gas analysts told news agency Reuters they expected flows to increase tomorrow as outages at the Troll field and Kollsnes gas processing plant ease.
However, the looming possibility of Russia cutting off gas into Europe has kept prices elevated, and risks the prospect of another rally.
Since Russia imposed a rouble conversion requirement for ‘unfriendly’ overseas buyers, it has cut off flows into Finland, Bulgaria and Poland – while also halting gas trading with Dutch and Danish energy firms.
Gas prices peaked at a record £8 per therm on UK benchmarks in March earlier this year following the announcement of energy sanctions on Russian supplies from both the UK and US.
While the European Union is unlikely to follow its Russian oil ban with a gas embargo in the near future, as the bloc is dependent on Kremlin-backed natural gas for 40 per cent of its gas flows, there is the possibility Russia could turn off the taps.
Currently, UK natural gas prices are trading at around £1.70 per therm in the UK – for context, prices were 45p per therm this time last year.