Gas prices in Europe soar again amid new cold snap

European benchmark natural gas prices rose Wednesday for the third day in a row, as gas deliveries from Russia via Ukraine and Poland remain weak as a new cold spell heads to Europe .

Natural gas prices at Dutch hub TTF, the benchmark for European gas, rose 6% at midday on Wednesday, after jumping 30% on Tuesday.

European gas prices reflect growing concerns that Russian natural gas flows to Europe via Ukraine and Poland have been abnormally low in recent days.

The supply of Russian gas to Europe via Ukraine fell earlier this week to the lowest daily volume since January 2020. Daily gas transit flows from Russia to the west to Europe via Ukraine on Monday accounted for half of the amount Russia had reserved for that day, Sergiy Makogon, Managing Director at the Ukrainian transmission system operator Gas GRT wrote on Facebook Tuesday, adding that the decline in gas volumes in transit is expected to continue. This is the lowest volume of gas transit that Russia has sent through Ukraine since January 2020, Makogon said.

Ukraine has accused Russia of deliberately suspending gas supplies to Europe during the winter months in an attempt to force approval of the controversial Gazprom-led Nord Stream 2 pipeline project.

At the end of December, the manager of the Ukrainian transport network sent a letter to the German Ministry of the Economy, in which he said: “We are firmly convinced that Nord Stream 2 endangers the security of gas supply to the European Union”.

Nord Stream 2 is awaiting approval in Germany and then an EU review, which will likely push the pipeline’s commissioning date well beyond the current winter heating season in Europe.

Meanwhile, due to lower transit volumes through Ukraine and the 16e consecutive day when gas from the Yamal-Europe pipeline via Belarus to Poland and Germany flows in the reverse direction from Germany to Poland, price of natural gas in Europe continued to increase Wednesday.

“There is again growing nervousness in the European gas market … This is mainly due to weak pipeline deliveries through Ukraine from Russia,” wrote Barbara Lambrecht, analyst at Commerzbank, in a commentary. note cited by Reuters.

“EU gas is trading higher for a third day due to weak supplies to Russian Gazprom via Poland and Ukraine, just as temperatures have started to drop again. Watch for the spread of TTF from March to April for signs of storage stress ”, noted Ole Hansen, Head of Commodities Strategy at Saxo Bank.

By Tsvetana Paraskova for OilUSD

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Mary I. Bruner