Natural gas prices in Europe headed for a weekly gain as low winter temperatures risk pushing households to turn on heaters, according to Bloomberg.
Benchmark futures have climbed about 8% this week. Temperatures below seasonal norms are expected to persist across Europe over the next two weeks, Maxar said in a report. Traders are watching how quickly demand for heating will respond.
Prices in Europe have declined from peaks in August as mild weather curbed consumption and shipments of liquefied natural gas helped to fill up storage sites – now almost full. But a rapid increase in demand could quickly deplete stocks, leaving the market exposed to further supply disruptions.
Net withdrawals from storage sites are picking up, with Italian stocks falling to 93.4% full, from 95.4% at the beginning of November. They still remain above the five-year average.
On Thursday, the European Commission set an intermediate target for use of gas in storage sites this winter. By February 1, the bloc’s inventories should still be at least 45% full to avoid depletion by the end of the winter season.
Signs are emerging that supply might tighten. Russia’s Gazprom PJSC threatened to curb shipments via Ukraine from next week – the last route for its gas to western European nations – amid a spat over fuel for Moldova.
Benchmark Dutch front-month futures increased 1% to €125 a megawatt-hour at 9:27 a.m. in Amsterdam.