European natural gas advanced after a two-day slump, with traders weighing risks to Russian supplies against the continent’s drastic efforts to curb the energy crisis.
(Bloomberg) — European natural gas advanced after a two-day slump, with traders weighing risks to Russian supplies against the continent’s drastic efforts to curb the energy crisis.
Benchmark Dutch futures for October rose as much as 5.5%. A three-day halt of the key Nord Stream pipeline started on Wednesday, and concerns are widespread that Moscow will find another excuse to clamp down on exports.
Separately, Gazprom PJSC said it would suspend gas sales to French utility Engie SA from Thursday because of a disagreement over payments.
The moves widen cutbacks to the continent, which have already driven inflation to the highest in decades and brought European economies to the verge of recession.
Read also: Europe Braces for Rationing Risks as Russia Showdown Intensifies
Both Germany and France said they are much better prepared for Russian supply disruptions, thanks to gas-storage refills.
“As we had expected, Russia is using gas as a weapon of war and is using Engie’s implementation of contracts as an excuse to further reduce French supplies, which have already drastically dropped,” French Energy Transition Minister Agnes Pannier-Runacher said Wednesday. “We have all the means to deal with this situation and to get through the winter.”
French Gas Storage to Be Full in About Two Weeks: Minister
Yet, the supply situation remains fragile amid competition with Asia for liquefied natural gas cargoes, which have helped Europe to fill the gap left by Russia. Another major provider, Norway, has capped its gas exports amid seasonal maintenance, with more works to come next month.
The European Union’s leaders are coming under increasing pressure to act even though the block has met its gas storage filling goal two months ahead of target as energy contracts are trading at elevated levels throughout the continent. The details on how the EU intervention would work are yet to be hashed out, with energy ministers set to discuss options at an emergency meeting on Sept. 9.
Dutch gas for October, the current benchmark, traded 4.6% higher at 277.50 euros per megawatt-hour by 8:35 a.m. in Amsterdam. The UK equivalent for the same month rose by 6.8%. Prices have been extremely volatile in recent days amid thin trading and much uncertainty.