European natural gas prices headed for a fourth week of gains as the region braces for an even deeper supply crunch over the winter that could push major economies into recession.
(Bloomberg) — European natural gas prices headed for a fourth week of gains as the region braces for an even deeper supply crunch over the winter that could push major economies into recession.
Benchmark futures were little changed on Friday, and about 6% higher for the week. The energy crisis that’s crippled Europe for months could get worse with just about two months to go before the winter heating period officially begins. The region is still heavily dependent on Russian gas to get through the colder months, and any further disruptions to supply could heighten the risk of blackouts and rationing.
Moscow reduced shipments through Nord Stream, the main pipeline linking Russia to the continent, to around 20% of the link’s capacity since late-July, citing issues with turbines. Flows have remained steady at that level since then. But even with gas stockpiles building steadily, a wider crisis is highlighting the fragility of the economy.
The Rhine river — northwest Europe’s most important river for the transport of industrial goods, including energy products such as diesel and coal — is set to become virtually impassable at a key waypoint in Germany on Friday, due to low water amid a scorching heat wave. The impact could linger for months, potentially driving up gas demand as a replacement.
Dutch front-month gas, the European benchmark, was little changed at 208.20 euros per megawatt hour as of 8:43 a.m. in Amsterdam. They are about 10 times higher than the seasonal average over the past five years.
“Prices will continue at high levels so long as gas supply from Russia appears to remain tight in the foreseeable future,” said Rystad Energy analyst Lu Ming Pang in a note.