European energy prices jumped amid concerns about France’s nuclear fleet and disruptions due to widespread strikes, along with a late-winter cold blast in other parts of the region.
(Bloomberg) — European energy prices jumped amid concerns about France’s nuclear fleet and disruptions due to widespread strikes, along with a late-winter cold blast in other parts of the region.
French year-ahead power surged as much as 12%, the most in more than six months. Benchmark gas futures added as much as 11%, rebounding from a recent slump.
France is struggling with fresh constraints on its nuclear output, affecting long-term prices. In the short-term, worker strikes throughout the country have upended operations at energy facilities this week. The situation is a reminder of the fragility of Europe’s energy system in the final weeks of winter.
France’s four liquefied natural gas terminals remain blocked by the labor action, which is currently expected to continue until March 14.
While the country was a net power exporter on Friday — thanks partially to strong wind generation — strikes at Electricite de France SA’s facilities curbed its capacity by 11.2 gigawatt in the morning. The company’s workers also plan to strike again next week, adding to market tremors.
Separately, EDF this week announced that it discovered new defects at two nuclear reactors that were halted for maintenance and repairs. That’s renewed concerns that the company’s electricity output will remain largely constrained this year after plunging in 2022.
The incidents in France occur against a backdrop of colder weather in northern Europe, particularly Scandinavia and the UK.
“This enduring winter is giving us one last frosty bite,” analysts at Zenergi Group said in a note. “The week is proving a major test for the markets, with evidence of volatility starting to build back in.”
LNG Flows
Even though Europe has higher-than-normal gas inventories, traders are wary of any supply disruptions after the region was largely cut off from Russian pipeline gas. The market is also focused on demand for liquefied natural gas in Asia, Europe’s key competitor for the vital fuel, with some purchases from Chinese buyers.
LNG WRAP: Asia Prices Rise as China Purchases Some Cargoes
Dutch front-month gas, Europe’s benchmark, traded 6.8% higher at €46.55 per megawatt-hour by 2:26 p.m. in Amsterdam.
French power for delivery in 2024 was up 11% at €197 a megawatt-hour, the biggest increase since late August on EEX. Next-month electricity prices in the country also rose.
Britain resumed gas exports to mainland Europe through its interconnector with Belgium, after flows were halted for a few days amid outages in the UK. Its month-ahead gas futures also advanced on Friday.
“Contracts climbed to attract spot LNG cargoes to help combat surging demand with colder temperatures,” UK supplier SEFE Energy Ltd. said. “Newfound issues within the French nuclear fleet also added to the pressure.”
–With assistance from Todd Gillespie and Francois de Beaupuy.
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