Natural gas prices in the UK and the Netherlands soared to record highs as concerns over tight supplies mount while demand increases.
Britain’s gas network is forecast undersupplied on Tuesday due to supply disruptions at UK facilities as gas-fired power generation climbed amid muted wind output.
At the same time, Hurricane Nicholas made landfall in Texas, threatening to disrupt liquefied natural gas facilities at a time when European traders are watching for signs of cargoes diverting back to Europe amid a seasonal lull in Asia. Europe’s record-high gas prices are catching up with those in Asia, which could make it a more attractive destination for LNG cargoes.
“Competition between European and Asian buyers to attract the needed LNG cargoes seems to have started, with no known limit,” Engie EnergyScan said in a note.
Norwegian gas capacity declined to the lowest level since June amid a fresh round of maintenance at production facilities.
Benchmark European gas futures traded in the Netherlands soared as much as 7% to 65.57 euros a megawatt-hour. The UK contract for next-month surged as much as 6.9% to 163.81 pence a therm, a new all-time high.
Prices increased even as Russian flows via a key link to Germany gained closer to normal levels after a month and a half of lower shipments.