June 22, 2024
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OIL & GAS

European Natural Gas Prices Ease Following Update on Norway Production Outage

European natural gas prices have eased after a sharp increase earlier in the week due to a production outage in Norway. Reports emerged indicating that the outage would be resolved by Friday.

On Monday, the Dutch TTF Natural Gas Futures, the benchmark for European gas trading, surged by 10.4% to $40.94 (37.78 euros) per megawatt-hour in midmorning trading.

This was the highest price recorded at Europe’s gas hub since December. Similarly, UK benchmark gas prices soared by 15% as the supply from Norway to Britain was significantly reduced.

The outage was caused by an incident at the Sleipner Riser platform.

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

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

The disruption affected gas prices outside Europe as well, raising concerns about supply shortages that might draw more U.S. liquefied natural gas (LNG) into Europe, thereby reducing availability for Asian buyers and the domestic U.S. gas market.

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

In April, portfolio managers increased their bullish bets on Europe’s gas prices to the highest level in six months. There are concerns that unplanned outages in Norway during the summer, increased natural gas demand in Asia, and the expiration of the current gas transit deal for Russian pipeline gas via Ukraine at the end of 2024 could strain gas supplies for Europe and drive prices higher.

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