LAST UPDATE 14:00
European gas prices continued to move higher today as planned strikes in Norway threaten to further constrain a market already reeling from Russian flow cuts.
It is noted that around 13% of Norway’s daily natural gas exports are at risk amid plans to escalate an impending strike. 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 its storage facilities in time for the winter, given declining flows from Russia and a prolonged shutdown of an LNG facility in the US.
In this climate the price of the natural gas contract in Amsterdam (TTF) is rising 8.6% and moves to 160.5 euros per megawatt hour, while at the high of the day it had reached up to 161.7 euros.
It is noted that natural gas prices recorded a 54% increase in the previous month.
Elsewhere, top industries in Germany could face a collapse in production due to gas cuts, the country’s top trade union official warned, ahead of talks with Chancellor Olaf Scholz starting today, 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.
Stable in the region of 110 dollars per oil
At the same time, oil prices are moving in a sign-changing manner, as worries about tight supply amid reduced production by OPEC, unrest in Libya and sanctions in Russia offset fears of a global recession.
Brent prices for September delivery are now up marginally by 18 cents or 0.16% at 111.8 dollars a barrel, while US WTI for August delivery remains essentially unchanged at $108.44 the 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 Agency 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 decreased by 100,000 barrels per day, to 28.52 million barrels, against the promised increase of about 275,000 barrels.
Falling output in Nigeria and Libya offset increases from Saudi Arabia and other major producers, while Libya is seeing further supply disruptions due to escalating political unrest, making it even more unlikely that OPEC will increase output 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 workers in the Norwegian oil industry this week could cut the country’s oil output by 130,000 barrels a day.
Source: Capital
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