On Tuesday, Russian began to increase blue gold flows through the gas pipeline through Ukraine to the Slovak town of Velke Kapusany. This trade route is one of the key trade routes that bring gas to Europe. The capacity of this pipeline has returned to the levels of the end of last year and is currently over 800 GWh per day.
The prices of futures contracts on the European stock exchanges reacted immediately to this news and fell by as much as 10%. It was the biggest drop in the last two weeks. This is dictated by the current weather in Europe, as February is expected to be less cold compared to the same period last year. Additionally, the recent intense winds have contributed to removing so much pressure from gas power plants in Germany and Great Britain.
On the London Stock Exchange, natural gas futures fell 11% to 180.79p a therm. The equivalent of these contracts on the Dutch ENDEX exchange fell to EUR 76.17 per MWh, the lowest price since January 20.
It is speculated that the volume of natural gas flow through Ukraine will be maintained. Transfers via the Jamal gas pipeline running through Poland have been suspended for six weeks. We are still dealing with geopolitical tensions with the Russian military stationed on the borders with Ukraine. Diplomatic talks regarding this crisis between the White House and the Kremlin continue, although there is no breakthrough.
Overseas, on the American stock exchange NYMEX, liquefied natural gas is approaching the $ 5 mark. Wednesday’s session opened at $ 4.893 in the spot market. The quotations reached $ 4.97 for a moment, after which buyers withdrew from the market.
The potential conflict between Russia and Ukraine may significantly affect the amount of LNG imported in Europe. Over 30% of purchased gas in the old continent comes from Russia. During the last days, PGNiG bought a supply of liquefied natural gas from the USA, which after regasification was delivered via gas pipelines to the Polish-Ukrainian border. Previously, such a transaction took place in 2019.
Later this year, the United States will have the largest gas export capacity in the world, beating Qatar and Australia. Strong demand from European and Asian countries is pushing up the quotations of futures contracts. Therefore, investors also focused on long-term transactions, which is to match the increased shipping capacity of this commodity.
Author: Oliwier Kowalczyk, Superfund TFI
Source: ISBnews
