(Bloomberg) — European natural gas prices rose as the market continues to weigh the risk of potential supply disruptions and further sanctions on Russia.
Most Read from Bloomberg
Flows via the Yamal-Europe link — which runs via Belarus and Poland — dropped to zero after Gazprom didn’t reserve capacity to deliver into Mallnow, Germany, at a regular day-ahead auction on Monday.
In addition, European Commission President Ursula von der Leyen said on Twitter that the EU and its partners “will keep up the pressure on the Kremlin until it stops the invasion of Ukraine.”
Russia’s invasion of its neighbor last month has roiled commodity markets from gas to grains. While prices have started to ease from an initial bout of volatility, traders remain on edge. Europe depends on Russia for more than a third of its gas supply.
“Gas markets seemingly are slowly reducing the ‘geopolitical risk premium’ in European prices as it becomes increasingly apparent that Russian flows are not likely to get interrupted in the near term,” said Ron Smith, an analyst at BCS Global Markets.
Transit shipments via Ukraine are expected to remain steady on Tuesday, according to orders. Russian exporter Gazprom PJSC confirmed normal flows via the nation to Europe.
In addition, above-average temperatures are forecast across northern Europe next week. Mild weather at the end of the heating season removes pressure on inventories, which have been historically low. Withdrawals from storage facilities are slowing ahead of an intense summer-injections campaign to ensure sufficient stocks by next winter.
In Ukraine, shelling continued overnight with buildings hit in the capital, Kyiv, officials said, adding that Russian forces were seemingly fortifying existing positions rather than pushing forward. The U.S., which has raised concerns about China’s support for Russia in the war, called on Beijing to use its influence with Moscow to help end the conflict, and cautioned there’ll be consequences for supporting the Kremlin.
Ukraine Update: China Seeks to Avoid Russia Sanctions Sideswipe
Benchmark gas futures rose 4.8% to 120.05 euros per megawatt-hour by 10:11 a.m. in Amsterdam, after falling as much as 8.3% earlier. The U.K. equivalent increased 7%.
German month-ahead power advanced by 3% to 254 euros per megawatt-hour, after dropping as much as 1.8% earlier.
Most Read from Bloomberg Businessweek
©2022 Bloomberg L.P.
