European natural gas prices rise to their highest level amid persistent supply problems and energy crisis

European natural gas prices have risen to their highest level in nearly four months amid persistent supply problems amid the worst energy crisis in decades. 

Benchmark futures jumped as much as 3.7% for the fifth time in a row. European energy markets are in turmoil with Russia's supply at multi-year lows, coupled with intense competition for liquefied natural gas with Asia, where prices have soared to the highest level ever seen in a summer. 

Traders are also keeping a close eye on exports from Norway, where strikes planned for this week threaten to cut gas and oil production. Production at the three fields began to close on Tuesday when the strike began, and two more strikes are planned in the coming days.

For now, shipment orders published by Norway's network operator show steady flows on Tuesday. But the strike could escalate on Wednesday and over the weekend unless a solution is found to the ongoing wage dispute, according to the local union. 

Dutch gas futures, the European benchmark, rose 2.6% to 166.29 euros per megawatt-hour by 9 a.m. in Amsterdam. On Monday, the contract was terminated at its highest level since March 8. 

Another short-term risk is that the Nord Stream pipeline – Europe's key conduit for gas from Russia – will not be resumed after 10 days of maintenance, which begins on July 11. This is a development that the region's largest consumer, Germany, is already considering as an option. 

Market developments are difficult to predict given Russia's "unpredictable behavior," the International Energy Agency said in a quarterly report released Tuesday. "A complete reduction in Russian gas flows cannot be ruled out."

A full supply cut that has become permanent is the "least likely scenario," but the chances of Nord Stream flows remaining reduced are high, analysts at Goldman Sachs Group Inc. said in a note, raising their price forecasts for Europe.

For now, pipeline supplies remain at about 40% capacity after Russia restricted shipments last month, citing technical concerns. 

Flows from Germany to Poland via the Yamal-Europe line fell to zero early Tuesday morning, network data showed. This may be a signal that traders are beginning to save gas in anticipation of the work on Nord Stream.