Wholesale natural gas prices in Europe rose on Thursday with the beginning of October and the fourth quarter of the year. These changes are due to ongoing political tensions in the Middle East and concerns regarding winter supply, which are putting pressure on the region's energy centers.
Increase in Natural Gas Market Prices
The front-month contract for next month in the Netherlands increased by 1.0 percent to €73.10 per megawatt-hour (MWh). These prices remain near several-week highs. In the UK, the wholesale natural gas contract for the next day rose by 0.7 percent to 184.00 pence per therm.
Start of Winter Heating Season and Decreasing Reserves
As the European continent enters the winter heating season, demand for seasonal heating has begun, and stored reserves are decreasing. According to data provided by Gas Infrastructure Europe, underground reserves in the European Union are approximately 12 percent lower than the levels recorded during the same period last year, reducing the continent's capacity to respond to sudden increases in demand.
Competition for marine liquefied natural gas (LNG) cargoes remains fierce, with high prices in Asia directly competing with European terminals for winter deliveries.
Gulf Tensions and Their Impact on the Energy Market
Ongoing tensions in the Middle East, particularly in the Strait of Hormuz, have increased pressure on natural gas prices in Europe. Stalled peace negotiations between Washington and Tehran and the ongoing deadlock in the Strait of Hormuz have kept Brent crude oil prices high, exerting upward pressure on the entire energy market.
Analysts warn that given the existing insecurities in global transportation routes, any unexpected early cold snap in Western Europe could lead to a rapid depletion of reserves and a new increase in gas prices. This situation could have serious consequences for the energy market, especially with the onset of winter.
Read more: The European Union faces delays in implementing methane regulations
