European gas rises as supply risks mount on Ukraine, hurricane - Bloomberg
European natural gas prices advanced as traders digested new risks to fuel supply, with Hurricane Francine approaching the US Gulf coast and Russian flows across Ukraine set for a possible reduction on Thursday, according to Bloomberg.
Benchmark futures gained as much as 2.4% after a selloff of more than 5% on Tuesday. The market is bracing for impact from Hurricane Francine, which is expected to make landfall in Louisiana on Wednesday afternoon or evening and potentially affect some gas liquefaction plants.
Traders are also eyeing volumes of Russian gas crossing Ukraine. Last month there were suggestions that flows could be restricted even further. While that hasn’t been the case so far, transit volumes at the Sudzha point are expected to drop by nearly a third on Thursday, according to preliminary nominations posted by the Ukrainian grid.
A spokesperson for the Gas Transmission System Operator of Ukraine declined to comment on the drop.
Across the Atlantic, Hurricane Francine was expected to head for Louisiana’s central coast, bypassing major liquefied natural gas facilities clustered around the Texas border and another one near New Orleans.
Preparations for the strengthened storm mainly involved shuttering nearby oil platforms, though gas supply to the Louisiana-based Cameron LNG plant has also dropped, signaling it has reduced production. Feedgas into Plaquemines LNG has been at zero since Tuesday, just as the newest plant in Louisiana had been preparing to start up operations.
The US is Europe’s largest supplier of LNG, which it has increasingly relied on since Russia curbed most pipeline flows in 2022. The hurricane season in the Gulf of Mexico has been closely watched by European gas traders as it can disrupt facilities delivering the vital fuel.
At the same time, Europe’s storage sites are 93% full, creating a cushion for any unexpected events affecting supply during the upcoming winter. Analysts at energy consultancy Inspired Plc said weak Asian demand is also helping to keep a lid on prices.
Dutch front-month futures, Europe’s gas benchmark, rose 1.2% to €35.70 a megawatt-hour at 4:52 p.m. in Amsterdam.
