The futures curve of Europe's benchmark natural gas prices suggests that traders are now more concerned about immediate supply risks than the upcoming winter heating season.
The premium of the October contract to the front-month September futures contract has been smaller this year compared to last year, Bloomberg notes.
The narrower premium signals that supply concerns at the end of the summer, due to maintenance in Norway and the Russia-Ukraine war, are now the center of traders' attention, rather than the next winter season.
Europe is now facing a tighter gas market as Norwegian field operators enter scheduled maintenance season.
Norway supplies about 30% of Europe's natural gas, becoming the biggest supplier after the halt of most Russian gas flows. Right now, there is a risk of a suspension of remaining flows passing through Ukraine after the latter's incursion into Russian territory, which would tighten supply even further.
The prospect of a possible gas supply disruption from Ukraine before its gas transit deal with Russia expires on December 31 is keeping the front-month futures higher.
European consumers will be hit hard and will have to pay more for natural gas if Ukraine does not extend the gas transit deal to allow Russian gas to pass through its territory en route to Europe, Kremlin spokesman Dmitry Peskov said on Wednesday.
On Thursday, the last day of the September contract of the Dutch TTF futures, saw the benchmark for Europe's gas trading rising slightly by 0.1% at $42.76 (38.55 euros) per megawatt-hours (MWh) at 11:41 a.m. in Amsterdam.
"TTF remains above EUR38/MWh, which is fairly elevated when you consider that storage is now 92% full," ING commodities strategists Warren Patterson and Ewa Manthey wrote in a Thursday note.
"Scheduled maintenance in Norway has seen daily gas flows to Europe fall more than 10% since the start of August. The concern for the market is if any of this maintenance overruns as we move closer towards the 24/25 heating season," they added.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More