Europe hits gas storage target early, but prices surge on Australia strike worries

The European Union has hit its 90% gas storage target more than two months ahead of schedule, but analysts warn a cold winter could still cause volatile prices and a scramble for energy.

“Together, we are weaning ourselves off Russian gas, and we keep working in parallel on more diverse energy supplies for the future,” European Commission President Ursula von der Leyen said Friday.

The price of European benchmark TTF futures fell 2.5% Friday but have soared nearly 30% this month, much of it on concerns over potential strikes at three major liquefied natural gas facilities in Australia.

Europe’s newfound need for LNG has made it more vulnerable to global energy shocks: Australia is a key supplier to Asia, and LNG from the country rarely makes it directly to Europe, but if buyers of Australian gas in Asia need to seek alternatives, it would put them directly into competition with Europe.

ETF: (NYSEARCA:UNG), (UGAZF), (BOIL), (KOLD), (UNL), (FCG)

Meanwhile, U.S. natural gas prices (NG1:COM) ended -7.9% for the week at $2.551/MMBtu, marking a third weekly decline in four weeks and the largest one-week drop since May, as temperatures are poised to cool in some parts of the U.S., effectively beginning a trend of decreasing demand until winter.

Lower prices also may have been weighed by soft LNG exports and strong U.S. production, as well as this week’s risk-off investor sentiment on concerns over China’s economy.