The price of gas in Europe is rising as Putin suggests a reduction in supply
LONDON, 5th March - Benchmark Dutch & British wholesale gas prices recovered on Thursday morning following a decline in the previous session. President Vladimir Putin had warned that Russia could stop its'remaining' gas flows into Europe. This added to fears about supply, especially after Qatar announced a force majeure on LNG shipments.
The Dutch front-month contract at the TTF hub – the benchmark price for?Europe – rose by 2% at 0928 GMT to 49.0 Euros per Megawatt Hour, after rising by 8.3% earlier in the day at 52.80 Euros/MWh.
ICE data shows that the British April contract, up 7.2% in earlier trading, is now 2.1% higher, at 129.5 pence/therm.
Putin responded to Pavel Zarubin, a Kremlin correspondent for Russian state TV. When asked about the?European plan to ban all Russian pipeline gas imports from Europe by late 2027 as well as new short-term contracts with Russian LNG starting in late April 2026 he said that it would be better for Russia to stop selling gas now.
According to a transcript published by the Kremlin's, Putin stated that other markets are opening and "it might be more profitable for us?to stop the supply of the European market at this time."
About 40% of EU?pipeline-gas was supplied by Russia. According to EU Commission figures, Russia supplied only 6% of the EU's?pipeline gas last year.
"Putin’s threat puts an important amount of supply in danger...LNG flow is the main risk." It would be easier to manage the global LNG markets in normal times if trade flows were adjusted over time. This would present a problem for Europe, as 110 bcm of (LNG) per year from the Gulf is currently impacted.
Analysts at ING said that Asian buyers are seeking alternative LNG supplies due to the tightness of the global LNG markets in light of Middle East developments.
The cost of filling Europe's gas storage for winter is increasing as the U.S. and Israel war on iran has disrupted LNG production and shipments. This has led to a tightening of supply, which in turn, sent prices soaring.
According to analysts at Kpler, buyers in Europe will need around 700 cargoes or 67 billion cube metres of?LNG to fill the storage space this summer. This is approximately 180 cargoes or 17 bcm more than last season. According to industry analysts and calculations, the United States is the world's biggest LNG producer and has little spare capacity to offset any lost supply. Plants are already operating at near capacity and most cargoes have long-term contracts.
The benchmark contract on the European carbon markets was up 2.02 euros, at 72.59 euro per metric ton.
(source: Reuters)
