EUROPE GAS-Prices rise on lower Russian flows
British and Dutch wholesale gas prices rose on Thursday amid a drop in Russian gas flows through Ukraine and a short UK system, while the announcement of Russian sanctions on a number of energy entities added further concern over future gas supplies.
In the British gas market, the contract for immediate delivery rose by 17 pence to 60 pence per therm by 0915 GMT while the contract for next day delivery rose by 31.50 pence to 77.50 pence per therm.
The UK system was 6.2 million cubic metres (mcm) undersupplied on Thursday morning, National Grid data showed.
A 9 mcm/day drop in flows of Norwegian gas through the Langeled pipeline and full exports on the IUK interconnector following the end of maintenance contributed to the slight undersupply, Refinitiv analysts said in their morning report.
In the Dutch gas market, the contract for next day delivery rose by 11.72 euros to 95.72 euros per megawatt/hour (MWh) and the contract for June delivery rose by 12 euros to 105.70 euros/MWh.
“I think that spike was saw today, that’s a response on the reduced flow through Ukraine,” Ole Hvalbye, a commodities anlayst at SEB bank, told Reuters.
Russian gas deliveries via he Sudzha entry point to Ukraine, the only alternative to suspended transmission via Sokhranivka transit point, which Ukraine shut on Tuesday, were down by 20 mcm/day on Thursday.
The significant reduction at Sudzha suggested “the curtailment of gas from Russia towards Europe has taken a big step”, independent energy consultancy Auxilione said in a note.
“A quick and severe reduction in flows from Russia would cause concern for Europe, despite it currently being a period of low consumer demand – as we need to prepare for next Winter by filling storage facilities which are at 37%,” they added.
Meanwhile, the market is still scrambling to work out the impact of sanctions announced late on Wednesday on Gazprom Germania, which was placed under trusteeship of the German energy regulator earlier this year.
“So today becomes a day of detail to work out the true impact of those announced sanctions. The market will likely hold premium until it finds comfort or confirmation,” Auxilione said.
Germany said Gazprom Germania subsidiaries were not receiving any Russian gas, but that alternative suppliers had been found.
Moscow also sanctioned the owner of the Polish part of the Yamal-Europe gas pipeline, but with flows on the route from Russia already cut, the immediate impact should be limited, SEB’s Hvalbye said.
In the European carbon market, the benchmark contract fell by 1.92 euros to 87.05 euros a tonne.
Source: Reuters (Reporting by Nora Buli in Oslo; Editing by Rashmi Aich)