(Bloomberg) – Natural gas prices in Europe rose on a cold weather spell that is expected to boost demand and test the region’s winter readiness amid tight supply.
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Benchmark futures rose 5.2% to their highest level since Oct. 13. Temperatures across Europe are likely to drop this month after a relatively mild November, and conditions could be cooler than average, according to Maxar Technologies Inc. and Marex.
Read: The arrival of winter cold in Europe will challenge energy systems
A harsh winter could make the continent more exposed to any further supply cuts after Russia cut off most pipeline gas flows over the summer. Liquefied natural gas has helped replenish missing shipments and fill tanks, but stocks are starting to dwindle. Gasoline prices are four times higher than normal for this time of year, fueling inflation and hurting economies.
Europe has tried to speed up infrastructure construction to receive more LNG, with Germany expected to have its first import terminals ready this month. But if a cold spell also hits Asia, demand in the region could increase and intensify competition for cargo, which could drive up prices.
For now, China’s appetite for LNG is limited in a tepid economy and high international prices are making cargo less attractive. LNG imports fell 22% through October.
First-month Dutch futures, the European benchmark, were up 4.5% at €153 per megawatt hour at 8:25 a.m. Amsterdam.
–With the help of Josefine Fokuhl.
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