European natural gas declines with flows from Russia stable

Benchmark European natural gas prices declined for a seventh consecutive session, with Russian flows to the continent continuing while the war in Ukraine grinds on.

Orders for Russian gas shipments via Ukraine edged higher Monday, but remained below capacity, while the Yamal-Europe pipeline continued to flow eastward to Poland from Germany. Gas transiting Russia’s main pipeline link to Europe, Nord Stream, remain high and stable.

While the European Union last week agreed to ban coal imports from Russia—the first time the bloc’s sanctions have targeted Moscow’s energy revenues—gas continues to be spared from penalties aimed at the country for its invasion of Ukraine.

The EU has a contingency plan to help Ukraine and Moldova with reverse gas flows if the war causes disruptions to supplies from Russia, European Energy Commissioner Kadri Simson told reporters in Vienna. She added that the bloc can’t currently treat Russia as a trustworthy partner and that disruptions may happen.

Austria’s Chancellor Karl Nehammer will meet Vladimir Putin in Moscow on Monday in an attempt to build dialogue with the Russian president. The Kremlin said the two leaders may discuss gas issues.

“The first face-to-face meeting between President Putin and a European leader offers greater prospects for an end” to the conflict, consultant Inspired Energy Plc said in a note.

However, earlier talks between Putin and other European leaders, including French President Emmanuel Macron, have failed to yield any meaningful concessions.

Dutch front-month gas futures traded 2.2% lower at 101.61 euros per megawatt-hour by 12:34 p.m. in Amsterdam. The U.K. equivalent declined 4.4%.

Electricity generation from wind power is forecast to stay low in Germany for the next two weeks, buoying demand for gas as the winter heating season draws to a close. 

Temperatures are expected to rise in parts of Western Europe in the coming days, forecaster Maxar said in a report. It’s currently cooler than normal in central and eastern Europe.