European Gas Prices Fluctuate as Russian Supply Fears Wane

(Bloomberg) -- European natural gas prices swung between gains and losses Friday as traders weighed reduced shipments from Norway and easing concerns over further supply disruptions from Russia.

Dutch front-month gas contract hit the lowest level since the start of the war in Ukraine, before closing the day higher as Norway crimped production capacity. Gassco AS, the country’s gas network operator, said works at the Troll and Skarv fields were extended, while Oseberg had an unplanned outage. 

Russian shipments remained stable this week, even though below historic levels. Concerns over a payment dispute -- the biggest headache for the market for weeks -- have also eased with major European buyers finding ways to meet Moscow’s demands for rubles without breaching EU sanctions. The standoff had earlier resulted in supply being cut off to Poland, Bulgaria and Finland, but companies like Italy’s Eni SpA and Germany’s Uniper SE have said they expect supplies to continue.

The front-month contract, which expires on Monday, lost 1.2% this week and closed at 86.88 euros per megawatt hour in Amsterdam, while the July contract gained 1.4% this week to 91.62 euros. UK gas for June delivery posted a 3.7% weekly gain. 

LNG Imports

Europe has boosted imports of liquefied natural gas to tackle any future supply issues. Output from import terminals in the continent have surged to the highest levels in five years for this time of year, and at least 10 cargoes from the US are expected to arrive in the first 11 days of June.

More of the liquefied fuel may be available for Europe as flows to China, the world’s biggest LNG importer, are expected to be limited. Consumption in the Asian nation has waned due to ongoing Covid-related lockdowns and demand destruction due to high prices, which is “a big relief for global gas markets,” consultant Inspired Energy said in a note.

However, demand is likely to rise elsewhere in Asia, drawing more cargoes eastwards in late-July and August, said Ciaran Roe, global director for LNG at S&P Global Commodity Insights. The higher competition could mean that Europe will need to pay a premium to attract cargoes.

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