Prices jumped Monday as jittery traders responded to an unexpected cutoff in supply.
Europe’s gas market has been jolted out of its slumber.
An outage in key supplier Norway sent prices up Monday by the most this year, and uncertainty over the duration of repairs has traders on edge.
A fault on a pipe at the Sleipner Riser platform shut off operations at the country’s massive Nyhamna processing plant and curbed flows into the UK’s Easington terminal, an entry point for a third of Britain’s supply.
Futures jumped as much as 13%, showing the impact of such a disruption even with European demand still sluggish and stockpiles brimming. Prices partly recovered Tuesday on news that the halt may end Friday.
Yet the network operator has given scant detail on the repair plan, and past outages at Norwegian facilities have often been extended.
Europe’s sensitivity to supply blips may only increase when winter approaches. Traders are aware the market can tighten with little warning, especially given the fragility of Russia’s remaining piped flows.
Panic began to spread in the region in late 2021 amid declining Russian volumes, which fell further after the invasion of Ukraine.
The continent has now adjusted to lower flows from its once-dominant supplier, with dependence shifting to Norway and key liquefied natural gas producers such as the US and Qatar.
But relying on LNG also is fraught with risks, with the current hot weather in Asia driving up competition for cargoes and global supplies far from immune to disruption.
Europe’s gas prices are already higher than predicted for this summer by Goldman Sachs Group Inc. and Energy Aspects Ltd. Volatility will likely persist as the region continues to bank on imports from a small clutch of suppliers.
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