European gas spike risk lingers, says Equinor CEO

By Nora Buli and Nerijus Adomaitis

OSLO (Reuters) - The risk of price spikes lingers on the European gas market, depending largely on weather during the peak demand heating season later this year and liquefied natural gas (LNG) supplies, the head of Norway's Equinor said on Thursday.

Plentiful supply, reduced demand helped by mild weather and high storage levels have lowered gas prices since records hit last year following disruption linked to Russia's invasion of Ukraine.

Equinor, which has become Europe's gas supplier following the reduction in Russian imports, on Thursday reported first-quarter earnings that beat analyst expectations but fell from last year's record earnings that were driven by the surge in prices.

"We have seen (a) 20% demand reduction in gas based on the high prices," Chief Executive Anders Opedal said in comments to Reuters on Thursday.

Europe's benchmark TTF front-month wholesale gas contract has fallen by 50% to around 37 euros per megawatt-hour (MWh) since the start of the year and is 90% below last year's record of 343.08 euros/MWh.

Opedal said further demand reductions were necessary to ensure Europe hits its target of filling gas storages to 90% by Nov. 1.

He said Europe was expected to meet that goal, helping to limit market volatility.

"But at the same time, when gas filling starts and demand is uncertain, we might see spikes in prices, but probably more towards the autumn," he said.

Storages are currently around 60% full.

As Europe also wrestles with the ongoing task of replacing around 150 billion cubic metres of Russian gas, Opedal said Equinor expected strong demand, including from Norway in the second quarter and planned to produce "at full throttle".

(Reporting by Nora Buli and Nerijus Adomaitis; editing by Barbara Lewis)