Gas prices in Europe rise amid concerns of escalating Mideast war

Benchmark futures rose 2.6% to almost 36 per megawatt-hour (about $400 per thousand cubic meters), which is an elevated level for the summer. Contracts rose for the fourth day in a row as traders find it increasingly difficult to build up the region's stockpiles before winter.

Concerns about a possible escalation of the war in the Middle East are reviving risk appetite, while traders are already facing stiffer competition from other major buyers of liquefied natural gas, such as China and Egypt. Europe's gas market has proven to be sensitive to supply disruptions this summer, largely because it now depends on supplies from around the world.

“Further escalations in the Middle East show how quickly the TTF can jump in a day,” said Florence Schmit, an energy strategist at Rabobank.

According to ship tracking data compiled by Bloomberg, LNG flows to Europe were about 30% below average in July. While the region's storage facilities are filling up ahead of the heating season and more flows are coming from Norway, hot weather has set in across much of the continent this week, boosting demand for air conditioning.

Austria's OMV said it had booked new pipeline capacity through Germany as it seeks to secure its energy supplies in the event of further disruptions to Russian supplies to the region. Austria and neighboring Slovakia are the main European importers of pipeline gas left after Gazprom restricted supplies to Germany and other countries two years ago.

“Short-term gas trading has changed,” said Marco Saalfrank, chief of continental Europe merchant trading at Swiss utility Axpo Solutions AG, adding that it is now more “sentiment driven.”