Gas Prices in Europe Are Rising: Key Factors
31 July 17:15
Wholesale gas prices in the Netherlands and the United Kingdom are rising on Friday, July 31: markets are closely monitoring signs of an increase in the number of LNG tankers passing through the Strait of Hormuz, and are also assessing the severity of the new heat wave in some parts of Europe. This is reported by "Komersant Ukrainian", citing Reuters.
Front-month gas futures on the Dutch TTF hub rose 2.17% to €59.58 per megawatt-hour.
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Gas futures for next-month delivery in the UK rose 2.59% to 146.16 pence per therm.
Reports that the first LNG tanker from Qatar in nearly three weeks had passed through the Strait of Hormuz suggests some improvement in the supply situation, but it is still too early to view this as a sign of normalization, UBS analysts noted in a report.
However, the geopolitical backdrop remains unstable, so the market is still vulnerable to new spikes in volatility, Mind Energy analysts noted in a morning note.
“The risk of another heat wave in continental Europe is also providing support (to prices),” they added. On the supply side, the picture remains largely unchanged: the most intense heat is being felt in Southern Europe, including Italy, while temperatures in Northern and Central Europe are slightly lower, though still above normal, said LSEG analyst Ulrich Weber.
Low gas storage levels in European storage facilities also continue to support prices, analysts noted.
According to Gas Infrastructure Europe, EU gas storage facilities are 56.39% full—just 0.4 percentage points above the historical low for this time of year, recorded in 2021.
Meanwhile, requests for pipeline gas from Norway remain at 327.6 million cubic meters per day, virtually unchanged from the previous day, according to operator Gassco.
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