(Bloomberg) -- European natural gas prices moved higher as demand for seaborne fuel picks up following a drop earlier this year.
Benchmark futures advanced after closing 1.4% lower a day earlier. Flows from terminals that import liquefied natural gas in northwest Europe rose to the highest since April earlier this week, grid data compiled by Bloomberg show.
While the volumes may briefly decrease again as unseasonably mild weather is damping demand for gas in heating this week, recent price rallies have attracted more cargoes to the continent. Several LNG vessels diverted from Asia since the start of October.
Some weather forecasts signal a cold start to November, which could drive demand for LNG and support prices. Europe’s gas storage sites are 95% full — higher than seasonal averages — but the level is slightly lower than at the same time last year, and some countries saw minor net withdrawals recently amid a cold spell.
Gas prices have been buffeted this month by elevated tensions in the Middle East, with traders closely monitoring developments in the region. Israel said it would make its own decision on how to attack Iran, keeping open the possibility that energy infrastructure may be targeted.
For gas markets, an escalation of the conflict would likely see importers such as Egypt affected, raising global competition for fuel cargoes. A key risk would be a closure of Strait of Hormuz, which transits around 20% of global oil and LNG.
“Geopolitical tensions are laying bare fragilities in the global energy system,” the International Energy Agency said in a report Wednesday. While energy prices are a far cry from the peaks reached during the crisis in 2022, “there remains an ever-present risk of volatility,” it said.
Dutch front-month futures, Europe’s gas benchmark, rose 0.5% to €40.16 a megawatt-hour at 8:34 a.m. in Amsterdam.
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