Prices rise after Russian flows via Ukraine drop

LONDON (Reuters) – British and Dutch wholesale gas prices rose on Wednesday morning, rising after a two-day slide, after Russian gas flows via Ukraine fell after force majeure was declared on one route.

In the British gas market, the contract for immediate delivery rose by 10.00 pence to 40.00 pence per therm by 0901 GMT while the contract for next day delivery rose by 3.00 pence to 41.00 pence per therm.

In the Dutch gas market, the contract for next day delivery rose by 6.42 euros to 87.00 euros per megawatt/hour (MWh), while that for July delivery rose by 4.9 euros to 98.50 euros/MWh.

“This is death by a thousand cuts. We sit there without knowing what to expect. Although we are still getting loads of gas, the curve is holding high due to uncertainty,” a European gas trader said.

“Of course people will be less willing to sell cheaper gas but by the end of the day the market will likely go lower as more gas is pumped,” he added.

Ukraine said on Tuesday it would suspend the flow of gas through a transit point which it said delivers almost a third of the gas Russia pipes to Europe via Ukraine, blaming Moscow for the move and saying it would move the flows elsewhere.

Nominations for Russian gas transit via Ukraine at the Sokhranovka entry point for May 11 fell to zero, data from Ukraine’s gas pipeline operator showed on Wednesday.

The data showed European requests for Russian gas via the Sudzha entry point stood at almost 72 million cubic metres for Wednesday.

Refinitiv analysts said the market will be carefully watching the result of a daily capacity auction to see if Russia is able to reroute its transit from Sokhranovka via either the Sudzha or Mallnow entry points.

Daily nominations for Russian gas deliveries to Slovakia via Ukraine also fell on Wednesday, data from Slovakian operator TSO Eustream showed, while eastbound gas flows via the Yamal-Europe pipeline from Germany to Poland were down slightly.

Analysts at Engie’s EnergyScan said that if Russian supply was to fall further, panic buying by some physical participants and investors buying could drive prices higher.

In the European carbon market, the benchmark contract rose by 2.1 euros to 89.43 euros a tonne.

(Reporting by Marwa Rashad; editing by Jason Neely)