Gas surges in Europe as heat wave clashes with supply cuts

Bloomberg

European natural gas prices jumped as reduced supplies raised concerns about the pace of refilling storage sites in time for next winter, just as a heat wave boosts demand for cooling.
Benchmark futures rise as much as 8%, increasing for a third day. A liquefied natural gas export facility in the US — a vital source of supply for Europe — will remain shut for longer than initially anticipated following a fire last week. At the same time, technical issues have curbed Russian flows through a major pipeline to Germany by about 40%.
The bout of intense heat that’s gripping Europe is pushing up gas demand and further tightening the market. Europe, which has relied on US LNG to fill the gap resulting from lower Russian flows, may have to compete more intensely with Asian buyers to secure spare supply. That could hamper the continent’s efforts to replenish its storage facilities until demand peaks again in the winter.
“This will make it harder for Europe to meet its storage targets this summer as the region is now losing supply from the east and the west, and the continent could be in for a winter season of sustained high prices as a result,” said Xi Nan, vice president for gas and LNG
markets at Rystad Energy A/S.
Storage sites across Europe have been getting a boost of injections, with facilities more than half full as companies tap all available resources. Eurasia Group estimates most would be topped up by late August if the pace of boosting inventories seen in early June continues, putting the continent in a good position to withstand any
supply shocks in the winter.