Concerns over LNG supply into Europe drives up prices

European LNG supply concerns and renewed infrastructure fears combined to drive NBP gas prices toward key levels.

Reflecting elevated volatility heading into Week 3, the Summer 25 contract saw the sharpest gains of any front-season contract since 23rd March 2023, after rallying more than 7.5p/therm (0.26p/kWh) before stalling just south of the 120p/therm psychological level by the end of the day (data from ICE).

The sanctions announced by the US Treasury on Friday have reignited a debate among EU member states regarding the continued purchase of Russian LNG cargoes.

The UK banned Russian imports of the super-chilled fuel back in October 2022 but the bloc has gradually been increasing shipments of the fuel since the Nord Stream pipeline was taken offline that same year.

So far, in the wake of Washington’s announcement, 10 EU nations have renewed calls to end imports of the fuel much sooner than the existing 2027 target to phase out all Russian fossil fuels.

It should be noted that LNG currently makes up a substantial proportion of EU gas imports and global supplies of the fuel are expected to remain tight for at least the next few years.

In other news, Russia has claimed that Ukraine attempted a drone attack on a key compressor station serving the Russia-Turkey Turk Stream gas pipeline. This 580 mile subsea pipeline serves as the last available transit route for Russian flows into continental Europe so these unconfirmed rumours may have triggered alarm bells at European gas hubs during afternoon trading. Ukraine has yet to comment on the allegation.

This morning, the market has managed to rollback a small amount of the previous session’s bullishness, with the Summer 25 front-season contract currently being offered circa 1p/therm (0.034p/kWh) below its previous settlement at time of writing.

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Price commentary courtesy of Crown Gas and Power