Gas prices in Europe continued to rise on Tuesday, reaching their highest level since the record high in March, after the announcement the day before of new drastic cuts in deliveries through the Nord Stream gas pipeline announced by the Russian gas giant Gazprom.
Around 9.15 GMT (11.15 in Paris), the Dutch TTF, the reference for natural gas in Europe, moved to 192.00 euros per megawatt hour (MWh), thus returning to the levels at the beginning of the Russian invasion of Ukraine and leading oil prices in its wake.
British gas was trading at 356.99 pence per therm (a unit of heat quantity), after hitting a high of over 357 pence, also the highest since its all-time high in March.
new peak
Gazprom announced on Monday that it would sharply cut deliveries of Russian gas to Europe via Nord Stream from Wednesday to 33 million cubic meters a day, citing the need for turbine maintenance.
This new cut reduces pipeline capacity to about 20%, from 40% today, as European nations scramble to replenish their reserves as winter approaches.
“European stocks are far from reaching the required level of 90% and fear is growing that Russia is using natural gas as a weapon to extract concessions from the West” in the context of the invasion of Ukraine, recalls Tamas Varga, PVM analyst Energy.
This is “further proof” that Europe must “reduce its dependence as soon as possible” on Russia, the Czech energy minister, whose country holds the rotating presidency of the EU Council, said on Tuesday.
The European Commission had proposed last week to reduce European gas demand by 15% starting in August, to alleviate the drop in Russian deliveries.
40% of European imports
Russia accounted for around 40% of EU gas imports until last year.
On the oil side, a barrel of North Sea Brent for delivery in September rose 1.45% to $106.67.
A barrel of American West Texas Intermediate (WTI) for delivery the same month rose 1.73% to $98.37.
Concerns about Russian gas supply in Europe have a collateral impact on oil prices, says Ricardo Evangelista, an analyst at ActivTrades, “as a possible gas supply restriction to Europe is likely to increase demand for oil and other related fuels, such as diesel.
“Tight physical supply, exacerbated by reduced gas supplies from Russia, is driving gains” in crude, Stephen Innes of SPI also said.
The analyst highlights the widening of the price differential between Brent and WTI (between 8 and 9 dollars now), “a sign of greater hardening in Europe than in the United States.”
Source: BFM TV
