Natural gas prices in Europe are rising amid cold weather and supply problems

Benchmark natural gas prices in Europe rose early on Monday amid continued supply risks from the Middle East and Ukraine and a colder crunch ahead of the winter heating season.

Dutch TTF Natural Gas Futures, the benchmark for gas trading in Europe, rose 2.35 percent to $39.20 (35.25 euros) per megawatt-hour (MWh) at 11:34 a.m. in Amsterdam, Monday.

After a weekly drop of 3.4 percent last week, European gas prices rose on Monday as traders weighed supply risks from conflicts in the Middle East and on the Ukraine-Russia border in Russia’s Kursk region, where Sudzha gas is metered. there is the Russian gas pumping station west to Europe.

European gas storage is now more than 93% full, according to data from Gas Infrastructure Europe. This provides some assurance of supply ahead of the winter heating season.

But stored gas would not cover Europe’s needs for the winter, so traders are watching potential supply disruptions as price drivers.

Fighting in Russia’s Kursk region continues, disturbing gas market participants. Moreover, the gas transit agreement to transport Russian supplies to Europe through Ukraine expires at the end of this year. Ukraine has signaled that it will not negotiate an extension of the agreement.

In the Middle East, tensions between Israel and Lebanon’s Hezbollah are rising as the region again teeters on the brink of all-out war, potentially threatening natural gas fields off Israel that supply gas to Israel, Egypt and Jordan.

In Norway, maintenance work at the Skarv and Sleipner units has been extended, meaning that Norwegian supply to Europe in the coming days will be slightly lower than previously expected.

In addition, weather forecasts point to cooler-than-usual temperatures in parts of Europe by the end of this week, which could increase demand for power generation and heating.

By Tsvetana Paraskova for Oilprice.com

More top reads from Oilprice.com