European Gas Jumps With Focus on Russia, Freeport LNG

(Bloomberg) -- European natural gas prices extended gains for a fourth day, the longest streak since the end of January, driven by supply cuts from the Freeport LNG facility and attacks on Russian energy infrastructure.

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Benchmark futures jumped as much as 8.1% on Monday before settling 6.7% higher, the biggest advance since Jan. 3. Prices have rallied recently after plunging as much as 30% since the start of the year, as traders focus on factors that will affect refilling storage ahead of next winter.

One factor behind the rally is a continued reduction in flows to the Freeport LNG export plant in Texas as one production line was briefly out over the weekend. And in Norway, an unplanned outage is reducing pipeline-gas exports.

Gas prices are also tracking advances in oil contracts following Ukrainian attacks on Russian refineries, which raise “the geopolitical temperature,” said Ole Sloth Hansen, head of commodity strategy at Saxo Bank A/S.

“Freeport and Ukraine attacks on Russian energy infrastructure are probably the main drivers,” he said. With carbon prices also up as much as 5%, there are “no bearish drivers today.”

Outages at global gas liquefaction facilities — from Malaysia to the US — are sending jitters through the market as Europe approaches the last weeks of its heating season. Colder-than-normal temperatures are expected across parts of northern Europe next week before heading higher.

Separately, pressure is increasing in the European Union to reduce Russian LNG imports this year, according to Energy Commissioner Kadri Simson.

Dutch front-month futures, Europe’s gas benchmark, advanced 6.6% to €28.82 a megawatt-hour at close, the highest level since Feb. 2

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