Natural gas prices touch new highs in Europe amid supply challenges

Key Points:

·         Natural gas benchmark Dutch TTF hub was trading at around 118 euros per MWH for November contracts in London.

·         The front-month contract rose almost 19% on Tuesday and has risen almost 400% since the beginning of the year.

Natural gas contracts surpassed new highs in Europe on Tuesday due to rising prices ahead of the winter season.

Natural gas benchmark Dutch TTF hub was trading at around 118 euros per megawatt hour (MWH) for November contracts in London.

The front-month contract set a new record as it rose almost 19% on Tuesday and has risen almost 400% since the beginning of the year.

U.K. has been hit by the rising prices in wholesale natural gas as prices for November rose 14% to £2.79 per therm.

Cause of the rise in prices

Demand has been increasing with the reopening of economies, particularly in Asia, which has caused wholesale prices to surge.

At the same time, challenges such as decrease in domestic production and adverse U.S. weather conditions have made restocking gas supplies difficult.

According to reports, many British energy suppliers have been unable to sustain in gas price crisis causing nine companies to cease trading in September.

Other countries facing the problem

In recent weeks, other governments including Spain, Italy, Greece and France have taken actions to cushion the impact of rising gas prices on consumers.

Lawmakers in France are urging EU to become less dependent on external markets for natural gas as most supplies come from Russia and Norway.

(With inputs from CNBC)

Picture Credits: Getty Images