European energy crisis expected to continue despite easing in wholesale gas prices 

Last Tuesday, gas prices soared to 10 times higher than a year earlier

Shipments of liquefied natural gas are heading to Europe, easing an energy crunch that’s forced heavy industries to curb output.

European natural gas fell for a fourth day as US supplies are expected to bring relief to the tight market and traders weighed both milder weather and risks to demand from the omicron virus variant.

Gas has whipsawed in recent days, soaring to record levels above €180 a megawatt-hour last Tuesday following a sharp drop in Russian flows. 

That’s 10 times higher than year-earlier prices. It slumped to about half that level on Monday - and is heading for the longest declining streak in two months - as shipments of liquefied natural gas head to Europe, easing an energy crunch that’s forced heavy industries to curb output.

“As we enter the closing stages of 2021, the European energy complex shows no sign of calming down for the holiday period,” consultant Timera Energy said in a report. 

“Industrial demand has been struggling in response, with metals and fertiliser producers having to curtail production.” 

Benchmark Dutch front-month gas fell as much as 19% to €90 a megawatt-hour, the lowest since December 6. Easing prices are pushing down power rates, with German electricity for January declining as much as 36% to €220 per megawatt-hour while French power for next month fell 22%.

An increasing number of LNG vessels are heading to western European ports. The region is attracting more supplies as Asia’s biggest buyers are opting to use their inventories this winter instead of procuring more.

Milder weather forecast for much of mainland Europe will curb energy demand, while there was also uncertainty over the impact of the fast-spreading omicron. Coronavirus infections have been surging across the globe, and over the weekend China reported the highest number of since January.

Still, there is no immediate end in sight for the energy crisis that has rattled European industry and induced government action to help ease the burden of surging household bills. 

Russia didn’t book any pipeline space for Monday to deliver gas through Mallnow in Germany, where the Yamal-Europe pipeline terminates.

-Bloomberg