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European gas declines as Norway restores supply after outages
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European gas declines as Norway restores supply after outages

17.01.2022 From our online archive
Europe is still grappling with its worst energy crisis in decades
A view shows a cooling tower of the nuclear power plant Emsland in Lingen, western Germany
A view shows a cooling tower of the nuclear power plant Emsland in Lingen, western Germany
Photo credit: AFP

European natural gas futures declined, with traders mulling forecasts for mild weather and recovering supply from Norway. 

Benchmark gas futures in the Netherlands erased an earlier gain of as much as 4.6%, with above-normal temperatures expected across the Nordic region and north of mainland Europe during the next two weeks. On top of that, gas flows from Norway, which bottomed out over the weekend due to unplanned field outages, edged higher but are still below normal levels for this time of year. 

Europe is still grappling with its worst energy crisis in decades. The continent’s gas inventories are at the lowest on record for this time of year, while the heating season is far from over. 

While supplies have recovered somewhat from lows earlier this winter, with tankers sailing from the US, traders are still on edge as flows from top fuel supplier Russia remain far below normal. On top of that, concerns of possible military action in Ukraine are adding to uncertainty about Russian energy exports. 

Traders will be closely watching capacity auctions later on Monday for clues on Russia’s plans to supply gas via Poland and Ukraine next month.

Gas trades lower but the market remains nervous with Russia’s unknown intentions over Ukraine “a major focus still,” said Ole Hansen, head of commodity strategy at Saxo Bank A/S.

Last week, the International Energy Agency blamed the country for Europe’s supply crunch, saying Russia could boost deliveries to the continent by at least a third from current levels, but the nation is still keeping spot sales capped despite the high prices. 

Responding to the allegations, Russia said it’s ready to increase deliveries. But the nation needs long-term contracts, Deputy Prime Minister Alexander Novak said over the weekend.

Dutch front-month gas traded 7.7% lower at €80.31 per megawatt-hour by 9:30 am in Amsterdam. The UK equivalent declined 5.4% to 197 pence a therm. 

©2022 Bloomberg L.P.


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