Gas Eases After 60% Surge as Putin Offers to Stabilize Market
European Gas Prices Extend Record Rally as EU Pledges Action
(Bloomberg) -- Gas prices fluctuated wildly on Wednesday -- surging a staggering 60% over just two days in Europe before sliding fast after Russia’s President Vladimir Putin said the country is ready to help stabilize global energy markets.
Dutch and U.K. futures plunged more than 7%. That’s after hitting fresh records earlier over increasing fears of energy shortages across the region. In the latest testament to how global gas markets have become, U.S. natural gas prices also plunged by as much as 8.3% after settling at the highest level in 12 years just a day earlier. Oil futures accelerated losses. The swift pullback in prices -- after a week of almost uninterrupted gains -- underscores just how extremely volatile energy markets have become in recent days, fanning fears of inflation around the world.
“Politicians making statements around the market are adding both strong bullish and bearish factors now,” said Tom Marzec-Manser, an analyst at ICIS.
Lower-than-anticipated flows from Russia have been a major cause of the crisis, according to some European officials. But Russia’s Gazprom PJSC will send more gas via Ukraine than it’s contracted to this year, based on the first nine months of supply, Putin said Wednesday at an energy meeting in Moscow. Exports to Europe over the nine-month period have been near a record, and could reach an all-time high in 2021 if that pace is maintained, he said.
Front-month Dutch gas fell 7.3% to 107.50 euros a megawatt-hour at 4:25 p.m. in Amsterdam, having earlier jumped 40% -- and 20% the day before. The U.K. equivalent dropped 7.4% to 272.76 pence a therm, after earlier rising 39%. Both contracts are still about six times higher than the five-year average for this time of year. U.S. futures for November delivery fell as much as 8.3%.
Rocketing energy costs have increased inflation risk and fueled concern that economic growth will slow.
Several European countries have called on the EU to take urgent action to cushion the blow of sky-high prices. The bloc’s energy chief, Kadri Simson, has pledged a revision to market rules by the end of the year, saying price shocks are “hurting our citizens and in particular the most vulnerable households, weakening competitiveness and adding to inflationary pressure.”
Some energy-intensive companies have shuttered operations because they’re becoming too expensive to run. With Europe’s gas stockpiles at their lowest seasonal level in more than a decade and global competition for liquefied natural gas intense, the squeeze is likely to persist as winter approaches.
Asian spot LNG climbed to a fresh record on Wednesday, ensuring the biggest consuming region will continue to outbid Europe in the fight for supply.
Russia earlier on Wednesday denied any responsibility for Europe’s gas-price surge, saying it “does not and cannot have any role in what is going on.” Kremlin spokesman Dmitry Peskov attributed the crisis to rising demand and depleted gas storage, low renewables output and tight spot-market supply. Gazprom said it expects a “good, cold winter.”
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