Wholesale natural gas prices in Europe fell on Tuesday to €96.29 per megawatt-hour (MWh). This decrease followed a peak price of €97.19 on Monday, the highest in four years. The price drop is significantly influenced by supply disruptions from Norway and low gas reserves in the region.
Supply Disruptions from Norway
Supply disruptions in Norway's gas network were among the main factors for this price drop. The Norwegian gas network operator, Gassco, reported an unexpected reduction in supply from the Oseberg field, increasing the initial estimate of a 7.7 million cubic meters per day reduction to 12.7 million cubic meters per day. This disruption particularly impacted the market as utilities sought to secure physical volumes ahead of seasonal heating demand.
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Low Gas Reserves in Europe
According to provided data, the gas storage level in the European Union has reached about 74.6% of its capacity, marking the lowest level recorded for late October since 2009. This figure is significantly below the historical average of 86% for this time of year and last year's filling rate of 95%. This structural shortfall has also been exacerbated by global disruptions in maritime flows.
Ongoing military unrest in the region, particularly concerning Iran and the Houthis in Yemen, has led to an approximate 80% reduction in LNG deliveries to Europe. This situation has increased the risk of energy supply from the Middle East and volatility in the number of oil tankers passing through the Strait of Hormuz.
With cold weather forecasted in Northern Europe for early November, utilities may be forced to deplete their unusually low reserves sooner than usual, leading to intense competition between European buyers and Asian importers for maritime cargoes in the Atlantic basin.
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