European gas prices keep surging as outages tighten supply

European natural gas prices rose for a fifth day, the longest streak since April, as outages tighten global supply while heat blankets parts of the region.

Benchmark futures advanced as much as 5.2 per cent on July 26, signalling that a bullish trend is taking hold after prices slipped in the first half of the month. Hot weather in southern Europe has lifted demand in places such as Italy, which is dependent on gas in power generation, Bloomberg reports.

While Europe emerged from last year’s energy crisis on a relatively stable footing — its gas storage facilities are significantly fuller than usual for the time of year — disruptions to supply and spikes in demand are still impacting volatility. Traders are likely to keep a close eye on weather forecasts for August to gauge future consumption.

Price gains in Europe go hand in hand with higher costs for fuel in Asia, as the two regions compete for available liquefied natural gas. Several outages are due to curb supply in the coming weeks.

In the US, a portion of the Columbia Gas Transmission Pipeline shut after a fire in the vicinity, reducing feed gas supplies to the Cove Point LNG plant. In Norway, planned maintenance at major facilities is scheduled for next month, and in Russia, Yamal LNG plans to shut down one production train for three weeks in August.

Dutch front-month futures, Europe’s gas benchmark, rose 4 per cent to €33.95 a megawatt-hour at 9:31 a.m. in Amsterdam.