European natural gas prices 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 Dutch TTF Natural Gas Futures, the benchmark for Europe's gas trading, surged by 10.4% to $40.94 (37.78 euros) per megawatt-hour 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.
By Irina Slav for Oilprice.com
More Top Reads From Oilprice.com:
Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More
U.S. Gasoline Prices Post Super Rare Double-Digit Weekly Drop
Oil Prices Fall After API Reports Large Surprise Builds in Crude And Products
The Pipeline Project Preparing for Canada’s Largest Ever Corporate Bond Deal
Oil Price Plunge Hits BP and Shell Shares
Washington Looking to Revive More Shuttered Nuclear Plants