European natural gas prices fell sharply Thursday after a brief gain, despite more damage discovered on the Nord Stream (NS) natural gas pipelines and calls for more energy conservation in Germany.

Details of a fourth leak were released by the Swedish Coast Guard and other agencies investigating a possible explosion on Tuesday that damaged the two NS systems, one of which had formerly moved Russian supply to Western Europe.

The Biden administration offered a guarded response during a Wednesday press conference, tying a U.S. reaction to more information from the multiple investigations. However, on Thursday, North Atlantic Treaty Organization (NATO) officials pointed to signs of sabotage.

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“All currently available information indicates that this is the result of deliberate, reckless and irresponsible acts of sabotage,” NATO stated. NATO Secretary-General Jens Stoltenberg said an official finding of sabotage could lead to ”a united and determined response” against the possible hostile actors.

EnergiDanmark analysts said European natural gas and power markets opened “weaker” on Thursday after two days of gains. The expectations are rising that the NS systems “won’t be usable ever again” without quick repairs. The onset of colder weather was supporting traders to act on impulses, analysts wrote, with “high uncertainty to remain.”
On Thursday, the Dutch Title Transfer Facility benchmark for European gas dipped more than $5/MMBtu during the session, closing around $54. Wednesday’s close had previously set a weeks-high of $63.912.

‘Sobering’ Consumption

Germany’s Federal Network Agency (FNA) reported the NS damage had no impact on the country’s overall supply outlook, as flows had been halted since the beginning of the month. However, the agency is calling for more conservation measures. Officials said gas consumption reached above average levels last week due to cold weather.
“This week’s figures are therefore very sobering,” said FNA President Klaus Müller. “Without savings in the private sector, too, it will be difficult to avoid a gas shortage in winter.”

Müller said the FNA would begin publishing weekly gas consumption reports and estimated the country would need to reduce usage by 20% to avoid a shortage.

German Chancellor Olaf Scholz’s administration also said the country plans to borrow as much as $194 billion to help shield consumers from rising energy prices.

Germany’s total storage status was reported at 91.50% of capacity Thursday, with its primary storage facility, the Rehden, at 75.99%. Overall European Union (EU) storage was 88% full on Wednesday, slightly higher than the five-year average.
Credit firms and energy analysts have warned that a colder than average winter could spike natural gas demand during the season by at least 5%. That may drain EU storage and leave the LNG market tighter for the following winter.

Europe has relied on increased LNG imports and pipeline gas from Norway to make up for a reduction of Russian gas, which previously made up around 40% of pipeline imports. That has left Europe largely competing with Asia for spot cargoes, ratcheting up LNG prices to historic levels.Analysts from Rystad Energy AS also reported that European demand for U.S. liquefied natural gas could outpace previous estimates. Ship brokerage Fearnleys in a recent report estimated Europe could import 49 million tons (Mt) of U.S. LNG by the end of the year, a 30 Mt increase year/year.