European benchmark natural gas prices continued to hover on Friday around their highest level in a year amid soaring demand in colder weather and an imminent risk to Russian gas supply to Austria.

Dutch TTF Natural Gas Futures, the benchmark for Europe’s gas trading, were trading on Friday around the highest level so far this year. This level was reached on Thursday, when prices soared by nearly 6%.

At 11:02 a.m. in Amsterdam on Friday, the front-month futures were at $48.32 (45.70 euros) per megawatt-hour (MWh) amid concerns about supply from Russia and high demand for heating and power generation with colder weather settling on most of Europe.

Earlier this week, Austrian energy firm OMV said it was awarded $242 million (230 million euros), plus interest and costs, in an arbitration case against Gazprom’s irregular German gas supplies and “takes the necessary next steps to enforce the arbitral award with immediate effect.”

In light of the arbitration award, OMV warned that “It is expected that there may be a deterioration of the contractual relationship under the Austrian supply contract of OGMT with Gazprom Export, including a potential halt of gas supply.”

“Payments are usually due by the 20th of every month, so the market is likely to be on edge at least until then,” Warren Patterson, Head of Commodities Strategy at ING, said in a Friday note.

“Forecasts for colder weather next week have only provided further support to prices,” the strategist added.

Analysts at ANZ Research noted that natural gas from EU storage sites is now being drawn down at the fastest clip in more than five years. Storage is 92% full at the sites, according to data from Gas Infrastructure Europe, down from 95% two weeks ago.

“The threat of an imminent cut to supply comes as the strain of the heating season emerges,” ANZ Research said, as carried by the Wall Street Journal.

By Tsvetana Paraskova for Oilprice.com

More Top Reads From Oilprice.com