The European carbon market tumbled by 3% in Tuesday’s session,  tracking the downward trend in gas prices. The EUA Dec ’24 last traded at €72,33, its lowest settlement since May 17. However, the decline in gas prices was more pronounced, with the TTF front month dropping by 6% compared to the previous session.

Both gas and carbon markets reacted to the news that the outage affecting the Norwegian gas flows to Europe would likely be repaired by the end of this week. “This led to the removal of some risk premium on the gas market which had feared a longer outage”, wrote Energi Danmark in a note this morning.

According to Gassco, the Norwegian operator, the outage which started on Sunday afternoon, was attributed to a crack in a pipeline at the offshore Sleipner Riser platform forcing the Nyhamna processing plant, one of Europe’s biggest, to shut all production late on Sunday. 

Source: Gassco

Consequently, gas deliveries dropped from 300,6 mcm/day on Saturday to just 250,0 mcm/day on Monday morning, prompting gas prices to jump as much as 10% before moderating to 5% at the close. Wednesday morning, nominated gas flows from Norway to the rest of Europe stood at 280 mcm/day. 

While the worries about reduced gas flows from Norway have been somewhat diminished over the past 24 hours as the outage is expected to be short-lived, the panic that occurred among the traders demonstrates that both gas and carbon have become particularly sensitive to any outages that can disrupt the Norwegian exports. 

“The outages once again highlight the risks on the European gas market, which is still highly dependent on individual producer countries,” the head of commodities research at Commerzbank, said Thu Lan Nguyen, quoted by Reuters. The same worries were expressed by Bloomberg earlier this week referring to the massive jump in gas prices on Monday which “highlighted the risk of relying too much on one major supplier.”