(Bloomberg) — Natural gas prices in Europe reversed a nine-day decline and climbed on Monday as weak flows from Russia again raised uncertainties about Europe’s ability to cope with the next winter months.
Benchmark European gas for next month increased as much as 17% to 82.7 euros a megawatt-hour, after falling in the early morning. Russia has avoided to book pipeline space to ship gas to West Europe at auctions. Also, the prospects that growing demand in Asia may attract LNG cargoes to the region, leaving Europe once again starving for the fuel, brings nervousness back to the markets.
European gas remains highly volatile. Prices rose to record highs before Christmas amid declining Russian flows, then fell sharply as more U.S. tankers started to turn to Europe, bringing a brief relief to the markets.
Russia’s exports have been closely scrutinized. Gazprom has been sending only as much gas to EU clients as it’s obliged to under long-term contracts. Gas shipments into Germany via Russia’s Yamal-Europe link have been halted for 14 days.
Indonesia, one of the world’s largest thermal coal exporters, has paused on Saturday coal shipments in January to secure dwindling supplies for domestic power plants. The decision could increase LNG needs from China, India, Japan, and South Korea, which together received 73% of Indonesian coal exports in 2021, Engie EnergyScan said in a report on Monday.
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Global liquefied natural gas exports jumped to a record last month as projects ramped-up output and utilities boosted imports to restock inventories, according to ship-tracking data compiled by Bloomberg. Qatar, the U.S. and Australia — the world’s top three exporters of the super-chilled fuel — all boosted output in December compared to the previous year.
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Unseasonably mild temperatures are forecast in the South and central portions of the continent this week, Maxar said in an emailed report on Monday. Below normal temperatures are seen across the North in the beginning of next week, trending warmer later on.
Prices remain far higher than normal after more than tripling last year. That has fueled inflation, forced industries to curb output and triggered the collapse of power suppliers.
Gazprom PJSC increased exports to its main buyers in Europe, Turkey and China last year, yet flows remained below pre-Covid levels as the producer capped deliveries to Europe as a whole, amid the continent’s worst energy supply crunch in decades.
U.K. gas trading on ICE Futures Europe were closed for holidays.
Increasing gas prices have pushed up power rates again, with German power for next year climbing 2.8% to 123.5 euros on EEX exchange. Carbon-emission permits increased 1.7% to 82 euros a ton.
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