European natural gas prices moved higher on Wednesday after three days of decline, as countries in the region warned of a difficult winter ahead, as noted by the Bloomberg agency.
The potential for Russian supply disruptions during peak winter demand remains in focus, keeping prices high even with gas storage levels currently normal for the time of year and flows steady .
Shipments through Nord Stream, the main pipeline connecting Russia to Europe, have been broadly stable at about 20 percent of the pipeline’s capacity since late July, when Moscow cut shipments from 40 percent. Russia’s Gazprom cited problems with turbine maintenance, including sanctions-related delays in returning equipment, for the reduced flows.
European officials are turning their attention to managing energy demand this winter. Britain is drawing up plans for organized power outages to industry and households during the winter, when cold temperatures are likely to coexist with natural gas shortages, Bloomberg News reported yesterday, Tuesday. Cities across Germany are reducing lighting and hot water in an effort to prevent the worst.
Meanwhile, a climate crisis threatens to exacerbate the region’s energy problems, potentially driving up electricity costs. The Rhine River is set to become virtually impassable at a key point in Germany on August 12 due to low water levels as a heat wave hits the region. The waterway is a key route in Europe for transporting fuel, coal and other industrial products.
In this climate, the Dutch contract – the European benchmark – rose 2% to 196 euros per megawatt hour.
Oil is falling
Oil prices meanwhile suffered losses as US crude inventories rose unexpectedly last week, signaling a possible pause in demand.
In particular, US crude inventories rose by about 2.2 million barrels for the week ended August 5, according to market sources citing data from the American Petroleum Institute. Analysts had expected a slight decline in inventories of 400,000 barrels.
Oil prices fell slightly on Tuesday as investors weighed recession worries on news that some oil exports had been suspended on the Druzhba pipeline from Russia to Europe that passes through Ukraine.
Ukraine cut off the flow of oil from the Druzhba pipeline to parts of central Europe because Western sanctions prevented Moscow from paying transit fees.
Flows along the southern route of the Druzhba pipeline were disrupted, while the northern route serving Poland and Germany was operating normally.
Czech company MERO said it expects the resumption of Russian oil supplies through the Druzhba pipeline to the Czech Republic within days.
Although worries about a possible global recession have weighed on oil prices recently, U.S. oil refiners and pipeline operators expect energy consumption to be strong in the second half of 2022, according to a Reuters survey.
Against this backdrop, Brent for October delivery fell 0.63% to $95.69 a barrel while US WTI crude for September delivery lost 0.81% to $89.77 a barrel.