European gas prices increase as winter supply risks loom

EUROPEAN natural gas prices rose on Wednesday (Aug 10) after 3 sessions of declines as countries in the region warned of a possibly difficult winter ahead.

The potential for Russian supply disruptions over the peak demand season remains in focus, keeping prices elevated, even with gas storage levels currently normal for the time of year and pipeline flows steady.

Shipments via Nord Stream, the main pipeline linking Russia to the continent, have been broadly stable at around 20 per cent of the link's capacity since late-July, when Moscow cut shipments from 40 per cent. Russia's Gazprom has cited issues with turbine maintenance, including sanctions-related delays for the return of equipment, for the reduced flows.

European officials are shifting their attention to managing demand for energy this winter. The UK is planning for several days over the winter when cold weather may combine with gas shortages, leading to organised blackouts for industry and even households. Cities across Germany are cutting back on lighting and hot water in a bid to avert disaster.

Meanwhile, a climate crisis is threatening to compound the region's energy woes, potentially adding to power costs. The Rhine River is set to become virtually impassable at a key waypoint in Germany on Aug 12, due to low water levels as a heat wave bears down upon the region. The waterway is a key artery in Europe for the transport of fuels, coal and other industrial commodities.

Dutch front-month gas, the European benchmark, rose by 2 per cent to 196 euros per megawatt-hour by 9.38 am in Amsterdam. BLOOMBERG