Photo: Bernadett Szabo/Reuters
According to Bloomberg, Italian traders continue to actively purchase LNG thanks to government support measures. The country has decided to pay more now to reduce the risk of gas shortages during the cold season. This approach contrasts sharply with the strategy of Germany and France, which have so far been more cautious about expensive supplies.
Supply disruptions and instability in the Middle East have caused tension in the gas market. Since the beginning of the year, gas prices in Europe have roughly doubled, and since early July, European gas futures have risen by more than 30%.
Italy has been particularly vulnerable due to its energy sector’s heavy reliance on gas. The intense heat wave has created additional pressure by increasing demand for electricity to cool buildings.
“Tension over gas prices is likely to persist in the coming months, starting in the coming weeks,” said Agostino Scornadgenki, CEO of Italian gas operator Snam SpA.
He noted that Germany and other European countries will have to accelerate gas injections into storage facilities. Snam stated that Italy is currently on track to meet its goal of filling storage facilities to 90% capacity.
Currently, Italian storage facilities are about 75% full. This is below the average level for the past five years, but it is one of the best figures among the largest European markets.
According to the source, Germany’s storage facilities are about 47% full—the lowest level for this time of year since 2009. In France, the level stands at about 56% following restrictions on LNG terminal operations over the summer.
Europe remains concerned about another price spike this winter. If supply disruptions from the Gulf states persist, European companies will have to compete for LNG with major buyers from Asia, which could lead to a further increase in fuel prices.
Goldman Sachs analysts report that European gas futures have risen more than 30% since the start of the month amid new U.S. strikes against Iran. Winter contracts are trading slightly below summer contracts, making stockpiling unprofitable for most traders. If the tense situation persists, gas prices could rise to €100 per MWh in December. This is approximately 75% higher than current levels.
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