Europe’s gas markets eye risk of Texas hurricane impact

European natural gas prices fell as traders assessed the region’s sturdy stockpiles against the impact of a hurricane in key fuel supplier Texas.

Benchmark futures fell as much as 3.1% on Monday, erasing earlier gains. The price swings signal that Europe remains sensitive to global disruptions – from unplanned outages to demand spikes in other parts of the world – even though the continent’s gas inventories are well-stocked for the time of year. Prices have risen about 18% since traders began stockpiling in April.

For now, the region is benefiting from its comfortable stockpiles and an increase in flows from top supplier Norway. Temperatures are also expected to stay mild in the UK, Germany and France, the region’s biggest energy markets, over the coming week.

One risk the market is closely watching is the possibility that hurricane Beryl, which made landfall on the Texas coast early on Monday, could cause interruptions to liquefied natural gas operations there. Freeport LNG’s liquefaction facility has already ramped down production, the company said. At the same time, hotter-than-normal temperatures are blanketing parts of Asia, raising the demand for gas to generate electricity.

“With LNG set to hold more sway in the gas supply of Europe, gas prices will remain highly vulnerable to unplanned supply outages and weather deviations in Europe or Asia,” BloombergNEF analysts Iryna Sereda and Alireza Nahvi wrote in a market outlook.

Dutch front-month futures, Europe’s gas benchmark, fell 3.0% to €32.09 a megawatt-hour at 4:23 p.m. in Amsterdam. The UK equivalent contracts also declined.