June 12, 2024
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Europe: Gas prices drop on Norway outage update

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Natural gas prices in Europe eased after soaring earlier in the week on the news of a production outage in Norway after reports emerged that the outage would be over by Friday.

The TTF Natural Gas Futures surged by 10.4% to 37.78 euros per MWh in midmorning trading on Monday after Norwegian natural gas flows dropped sharply. That was the highest price at Europe’s gas hub since December.

The UK benchmark gas prices also soared by 15% as supply from Norway to Britain was crippled.

The outage was attributed to “an incident at the Sleipner Riser platform on Sunday, where we were told they are shutting down,” Alfred Hansen, head of pipeline system operations at Gassco, a Norwegian pipeline operator, told Reuters on Monday morning.

According to Gassco, the incident was a crack in a pipeline carrying natural gas from the Sleipner Riser platform to a processing facility.

The outage lifted gas prices outside of Europe, too, on concern about supply shortages that would suck more U.S. liquefied natural gas into Europe, reducing availability for Asian buyers and for the domestic U.S. gas market. However, it mostly highlighted Europe’s vulnerability to natural gas price swings due to its heavy dependence on imports.

“The outages once again highlight the risks on the European gas market, which is still highly dependent on individual producer countries,” the head of commodities research at Commerzbank, Thu Lan Nguyen, said in a note as cited by Reuters.

In April, portfolio managers boosted their bullish bets on Europe’s gas prices to the highest level in six months. Money managers have been concerned that unplanned outages in Norway during the summer, higher natural gas demand in Asia, and the end of the current gas transit deal for Russian pipeline gas to flow via Ukraine at the end of 2024 could sap gas supply for Europe and boost prices, oilprice.com reports.

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