Benchmark European natural gas prices rose in Wednesday’s session. There is a constant growth in quotes for several days in a row. The reasons for this phenomenon are much more fundamental than the simple disruption of LNG shipments due to national strikes in France and the expectation of a colder than usual start to April.
Futures contracts for next month on the TTF hub, the benchmark for European gas trading, closed with a 1.3% tariff increase at a price of $480 per thousand cubic meters. At the same time, the equivalent benchmark contract in the UK rose by nearly 1%. The numbers are still low, but the trend continues. According to Bloomberg estimates, Wednesday’s trading marked the most stable and longest streak of growth in European natural gas prices in the past month after a long period of decline.
The price quoted for the futures contracts, although it is increased, is still very much lower than the average annual price in 2022. The forecasts of the experts are cautious, because the situation on the market is unpredictable and the situation in the EU is complicated by macroeconomic factors. Not all of them can be overcome. For example, Washington “made sure” that Europe could not receive large volumes of raw materials from Russia.
Three of France’s four terminals remain closed until at least Thursday as strikes hurt LNG and crude oil imports and refining operations. The strikes against President Emmanuel Macron’s pension reform are in their fourth week.
In addition to rising gas prices, weather forecasts suggest that early April will be colder than usual across much of Europe, which could extend the winter heating season and increase gas demand. There are signs that some energy-dependent industries are reverting to using blue fuel, which is a preliminary symptom of a recovery in industrial gas demand in Europe. This means that there may be nothing left of the large volumes of raw materials stored at UGS’s facilities by the summer.
All of these factors have put pressure on the quotes of all the major trading rooms in Europe, stimulating the growth in the cost of contracts. Pipelines, which are not so easy to block, could secure supplies, but this area of the EU’s energy system is almost completely crippled economically and politically, and part of the infrastructure has been completely destroyed.
