European Gas Prices Reach Highest Levels Since November Amid Russian Pipeline Concerns
European gas prices are currently soaring to their highest levels since November last year due to worries about potential disruptions in Russian pipeline flows. This surge comes as the Austrian energy company OMV plans to stop paying Gazprom for imports, raising concerns that Gazprom may cut flows to Europe if payment is not received.
OMV’s decision stems from a EUR230m arbitration award, leading to uncertainty in the market as payments are typically due by the 20th of every month. With potentially 5TWh per month of supply at risk, equivalent to roughly 500mcm, forecasts of colder weather next week are further boosting prices.
Meanwhile, in the US, Henry Hub gas prices fell significantly following the EIA’s report of a larger-than-expected increase in natural gas storage. Despite a bearish outlook in the IEA’s latest oil market report, oil prices managed a slight gain, supported by a significant draw in US gasoline inventories.
The IEA anticipates a sizable surplus in the global oil market, even if OPEC+ does not unwind its additional voluntary cuts. Non-OPEC+ producers are expected to increase supply by around 1.5m b/d in 2025, potentially offsetting demand growth. Compliance with production targets will play a crucial role in balancing the market.
Refined product inventories in the ARA region and Singapore have seen fluctuations, with gasoil and middle distillate stocks showing notable changes. Despite uncertainties in the energy market, investors should stay informed and consider their financial objectives before making any investment decisions.