Natural gas prices fall as stable supplies calm worries

Natural gas prices in Europe fell as stable supplies countered worries over fresh sanctions against top exporter Russia. Benchmark futures settled 2.3 per cent lower with robust inflows of liquefied natural gas (LNG) to the continent, milder weather forecasts and high wind output in parts of Europe.

Gas shipments from Russia via key pipeline routes are also broadly stable, helping keep prices in check even with mounting calls for new penalties against Moscow.

“Losses reflect a relief in the market that flows have not been interrupted and that the winter trading period is firmly behind us,” consultant DB Group Europe said in a note.

Yet, the talk of applying new sanctions on Russia should add "some support" to prices, it said. The European Union said it was working on additional sanctions to penalise Russia over what appear to be war crimes in Ukraine. French president Emmanuel Macron said in a radio interview that the union would discuss new measures, including possible restrictions on Russian oil and coal. But opinion seems to be divided over gas imports.

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While German defence minister Christine Lambrecht said over the weekend the EU should talk about ending purchases of the fuel from Russia, Austria will not support measures targeting the sector as it could hurt the EU more than Moscow.

Rouble payments

Traders are keeping a close watch on moves by buyers, particularly after Moscow last week initiated rouble payments for the fuel. While some are still assessing the plan, Lithuania, a relatively small client, has fully ended gas imports from Moscow in response to the demand.

Meanwhile, Germany is taking steps to safeguard its supplies after European units of Russia's Gazprom PJSC came under pressure from clients and business partners. Gazprom Germania GmbH, owner of energy supplier Wingas GmbH and a gas storage firm, will come under the trusteeship of the German energy regulator until September 30th, economy minister Robert Habeck said on Monday.

The move comes after the Russian gas giant exited the German subsidiary without seeking government approval, violating German law, he said.

Dutch front-month gas, the European benchmark, closed lower at €109.52 a megawatt-hour, after posting its first weekly gain in a month last week. The UK equivalent contract fell 5.2 per cent.

Bearish signals also came after Maxar forecast higher temperatures in the continent later this week following a spell of cold weather. That could reduce demand for gas, with the winter heating season almost ending.

Supply, meanwhile, remains robust, with LNG cargo arrivals in northwest Europe set to remain strong after a flurry of imports in the first four days of the month, ship-tracking data showed. Most shipments came from the US, followed by Qatar and Russia. Imports in March were near the January record. – Bloomberg