LAST UPDATE 10:34
Natural gas prices are moving higher in Europe according to Bloomberg, as planned strikes in Norway threaten to further constrain a market already battered by Russian supply cuts.
About 13% of Norway’s daily natural gas exports are at risk amid plans to escalate an impending strike by managers, the country’s oil and gas lobby warned at the weekend. Three outlets are to be closed by the strike which starts on Tuesday, while the planned action the next day will put three more out of business.
That adds to fears that Europe may not have enough natural gas to fill storage in time for winter, given declining flows from Russia and the prolonged shutdown of a key export facility in the US. Supply risks are spreading across the European economy and putting increasing pressure on traders and utilities.
In this climate, the Dutch contract – a reference point for Europe – rises 0.8% and moves to 149 euros per megawatt hour. Prices have risen 54% in the past month.
Top industries in Germany could face collapse due to gas cuts, the country’s top trade union official warned ahead of talks with Chancellor Olaf Scholz starting on Monday. The energy crisis is already driving inflation to record levels and could lead to social and labor unrest, said Yasmin Fahimi, head of the German Trade Union Confederation.
Russia has reduced transport through the largest Nord Stream pipeline by 60% and the pipeline is scheduled to be completely shut down next week for maintenance. Germany has expressed doubts that the pipeline will continue to supply after the work.
Upward trends in oil prices as well
Oil prices reversed losses and rallied today as worries about tight supply amid lower output from OPEC, unrest in Libya and sanctions in Russia offset fears of a global recession.
Brent for September delivery was up 55 cents, or 0.5%, at $112.8 a barrel, while WTI for August delivery was up 44 cents, or 0.4%, at $108.87 a barrel.
“Oil fundamentals remain supportive. Spreads point to a tight market and clearly OPEC is still struggling to meet agreed production levels,” said Warren Patterson, head of commodity analysis at ING.
“The group appears to be struggling to maintain current production levels, with production falling in June,” he added.
The production of the 10 member countries of the Organization in June fell by 100,000 barrels per day, to 28.52 million barrels, against the promised increase of about 275,000 barrels.
Falling production in Nigeria and Libya offset increases from Saudi Arabia and other major producers, and Libya is seeing further supply disruptions due to escalating political unrest, making it even more unlikely that OPEC will raise production quotas.
Libyan exports have fallen to between $365,000-409,000 a barrel, down from $865,000 a barrel relative to normal levels.
In a further blow to supplies, a planned strike by Norwegian oil industry workers this week could cut the country’s oil output by 130,000 barrels a day.
Source: Capital
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