The futures curve of European reference prices for natural gas suggests that traders are now more concerned about immediate supply risks than about the upcoming winter heating season.
Bloomberg notes that the premium of the October contract over the front-month September futures contract was lower this year compared to last year.
Traders’ attention is now focused on signals of lower premiums and supply concerns at the end of the summer due to maintenance work in Norway and the war between Russia and Ukraine, rather than the coming winter season.
Europe is currently facing a tighter gas market as Norwegian field operators enter the scheduled maintenance season.
Norway supplies about 30 percent of Europe’s natural gas and has become the largest supplier after most Russian gas supplies were stopped. There is currently a risk that the remaining gas supplies through Ukraine will be cut off after it encroaches on Russian territory, which would further tighten supplies.
The prospect of a possible disruption in gas supplies from Ukraine before the gas transit contract with Russia expires on December 31 is keeping futures higher for next month.
European consumers would be hit hard and would have to pay more for natural gas if Ukraine did not extend the gas transit contract to allow Russian gas to pass through its territory on its way to Europe, Kremlin spokesman Dmitry Peskov said on Wednesday.
On Thursday, the last day of the September contract of the Dutch TTF futures, the benchmark for European gas trading rose slightly by 0.1 percent to 42.76 dollars (38.55 euros) per megawatt hour (MWh) at 11:41 a.m. in Amsterdam.
“TTF remains above EUR 38/MWh, which is quite high considering that storage is now 92% full,” ING commodity strategists Warren Patterson and Ewa Manthey wrote in a note on Thursday.
“Due to scheduled maintenance work in Norway, daily gas flows to Europe have fallen by more than 10% since the beginning of August. The concern for the market is that these maintenance works will be delayed as the 24/25 heating season approaches,” they added.
By Tsvetana Paraskova for Oilprice.com
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