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European Gas Futures Hit Six-Week Low as Ukraine Transit Concerns Ease

Oil and Gas

European gas futures, Ukraine transit, Russian gas exports, Hurricane Francine

Business Honor
13 September, 2024

Gas prices drop amid reduced worries over Russian exports through Ukraine; U.S. supply remains steady despite Hurricane Francine.

European natural gas futures have fallen to their lowest level since late July, driven by a reduction in concerns over Russian gas exports passing through Ukraine. Benchmark front-month contracts dropped 2.6%, reversing gains from earlier in the week. Recent Ukrainian fuel-shipment data indicated that Russian gas flows would remain steady, easing fears of disruptions that had previously spiked prices.

The decline follows a brief surge in prices due to earlier signals of a reduction in gas shipments. However, current data shows consistent export levels, stabilizing the market for now. Meanwhile, in the U.S., Hurricane Francine, which recently struck southern Louisiana, has weakened to a tropical depression. Despite causing some power outages near the Plaquemines LNG plant, overall fuel flows at U.S. export facilities remained uninterrupted.

The European market is also adjusting to the upcoming heating season with sufficient gas inventories and currently subdued demand from both industrial and power sectors. Analysts from Energy Aspects Ltd. and Engie SA’s EnergyScan suggest that the market has found a balance between ample EU gas stocks and ongoing supply risks. However, any significant disruption, such as a sudden increase in demand or a halt in Russian gas flows due to the upcoming expiration of the transit agreement with Ukraine, could lead to price volatility.

Dutch front-month futures, the European gas benchmark, settled at €35.19 per megawatt-hour in Amsterdam, marking a 2.6% decline. The UK gas futures also experienced a drop, reflecting the broader trend in the market.