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(Bloomberg) — European natural gas prices held near the highest levels since December following concerns over Russian pipeline flows, providing an incentive for more seaborne imports.
Benchmark futures fluctuated Monday around €40 a megawatt-hour, after posting a second-consecutive double digit weekly advance on Friday.
Russian gas continues to flow via the Sudzha intake point on the border, even after Ukrainian troops made a surprise cross-border attack last week. Separately, Ukraine said late Sunday that Russian troops started a fire on the grounds of the occupied Zaporizhzhia nuclear plant, though radiation levels appear to be normal at the facility.
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Elevated gas prices in the crucial stockpiling season will likely divert more liquefied natural gas to the region from the US, Europe’s top supplier of the fuel. Europe’s LNG imports slumped in July, while Asia received the most monthly US cargoes since 2021, ship-tracking data compiled by Bloomberg show.
Softer LNG demand in Asia this month — in part due to easing temperatures — and heightened geopolitical risk in the Middle East — is altering the profitability of LNG shipping routes, “opening up the potential for more US cargoes to divert to Europe,” according to S&P Global Commodity Insights.
Still, competition for LNG with Asia remains fierce, as last month illustrated how quickly Europe’s flow of the fuel may dry up. Heat waves, particularly in Asia, have helped to drive demand in the region.
“The elephant in the room is this upcoming winter,” said Tom Roberts, chief executive officer of London-based Xterna Group, which analyzes energy data. “The focus seems to be on geopolitics in general at the moment, yet these gas intensive countries are consuming record levels of gas.”
Dutch front-month futures, Europe’s gas benchmark, rose 0.2% to €40.55 a megawatt-hour by 10:05 a.m. in Amsterdam.
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