European Gas Prices Rise as Lower Renewable Output Boosts Demand

(Bloomberg) -- European natural gas gained as lower renewables generation boosts demand for the fuel, while traders continue to grapple with the impact of proposed European Union sanctions on Russian oil.

Benchmark futures rose as much as 3.8% in a third day of gains. German wind power slumped, according to data from the European Energy Exchange, and output is forecast to remain curbed rest of the week. In the U.K., demand for gas for power generation has remained elevated since the end of April.

The EU on Wednesday proposed phasing out Russian crude and oil product purchases this year, potentially boosting demand for gas and coal for energy. It brings more risk for the market after Moscow halted direct flows to Poland and Bulgaria last week for failing to meet its demand to be paid in rubles. 

More nations face payment deadlines in the coming weeks. The EU has said buyers opening rubles accounts with Gazprombank JSC to pay for supplies would breach the bloc’s sanctions on Moscow.

Meanwhile, Norwegian gas supplies to Europe slipped from the day earlier. Supplies of Russian gas via Ukraine remain steady, while Poland is receiving gas in reverse mode from Germany.

Cut Off by Moscow, Poland Gets Russian Gas From Its Allies

Benchmark gas futures for delivery next month were 1.4% higher at 105.30 euros a megawatt-hour at 4:21 p.m. in Amsterdam, while the U.K. equivalent contract rose 3.9%. German power for next year and coal prices also increased.  

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