European gas extends scorching rally as supply fears mount

Bloomberg

Natural gas in Europe headed for the longest stretch of daily gains in more than nine months as persistent fears of deeper supply cuts by Moscow spread through the market.
Benchmark futures, which have doubled their value over the past month, surged as much as 9% for a seventh day of increases. The crisis has also sent power prices to record highs as Russia’s tightening hold on energy supplies brings the risk that Europe may struggle to keep the heat and lights on this winter.
A key pipeline from Russia to Germany is supplying at just 40% of its capacity and is scheduled to close for seasonal maintenance starting next week. Concerns are mounting that it won’t return to full service after the work. Russia slashed flows through the link last month, citing technical issues with turbines that need to be serviced in Canada — with one already stuck there following Ottawa’s sanctions against Moscow.
A prolonged halt would jeopardize plans to have storage sites sufficiently filled in time for winter, when demand typically peaks. German Economy Minister Robert Habeck urged Canada to release the turbine before the Nord Stream maintenance begins, which would remove an excuse for Moscow to continue capping supplies.
“It is with a heavy heart that we had to ask for this,” Habeck told Bloomberg News. “We need capacities in Nord Stream 1 to fill up our storage.”
Nord Stream has six major turbines to pump gas across the Baltic Sea, which were manufactured and Canada and have to be regularly sent back there for maintenance. One turbine was being overhauled in Montreal and can’t be returned because of the sanctions that prohibit vital technical services from being exported to Russia’s fossil-fuel industry. Other turbines are still in Russia, but not all of them are working because of the needed maintenance,
according to Gazprom PJSC.
Dutch front-month gas, the European benchmark, was 8.4% higher at 185.39 euros per megawatt-hour at 2:42 pm in Amsterdam. The UK equivalent contract rose 19%.
Europe is in the middle of the biggest energy crunch in decades. A heatwave in the region, drop in German wind power generation next week, poor hydro output in southern Europe and weak nuclear generation in France are all adding to fears about Nord Stream flows, EnergyScan said in a note.
Na are preparing to control the fallout, which is already squeezing utilities’ finances and contributing to surging
inflation. Before it invaded Ukraine, Russia covered the supply gap during previous Nord Stream maintenance with higher flows through another major pipeline, Yamal-Europe, which runs through Belarus and Poland. Gazprom also used its own storage sites in the European Union.
Those options are no longer on the table after Moscow in May imposed sanctions on the Polish owner of the Yamal link and a former Gazprom unit that holds most of EU storage capacity.