LONDON (Reuters) – British and Dutch gas prices fell on Friday morning after sharp gains the previous day on the Russian invasion of Ukraine.
In the Dutch gas market, the front-month contract fell by 27.50 euros to 108.50 euros per megawatt hour (MWh) by 0816 GMT, having risen to an intraday high of around 140 euros/MWh on Thursday.
The price for April was down 5.50 euros at 110.50 euros/MWh, while the May contract was down 16.50 euros at 107.50 euros/MWh.
In the UK gas market, the weekend gas price was down 15.00 pence at 261.00 pence per therm, while the summer 2020 contract slumped by 70.00 pence to 260.00 p/therm.
“This is perhaps a correction after the massive hike yesterday but the market will still be extremely volatile,” a gas trader said.
Missiles pounded the Ukrainian capital on Friday as Russian forces pressed their advance and Ukrainian President Volodymyr Zelenskiy pleaded with the international community to do more, saying sanctions announced so far were not enough.
In response to the invasion, U.S. President Joe Biden hit Russia with a wave of sanctions. However, Russia will not have its oil and gas flows specifically targeted by sanctions, a U.S. official said.
Britain, Japan, Canada, Australia and the European Union also unveiled more sanctions on Moscow.
“Clearly there is concern over what retaliation we could see from Russia due to sanctions. The main risk being that we see Russia further reducing gas flows to Europe,” said analysts at ING Economics.
Russian’s Gazprom said it was supplying gas via Ukraine in line with demand from European consumers. Demand from European consumers stood at 103.8 million cubic metres on Friday.
Eastbound natural gas flows through Russia’s Yamal-Europe pipeline jumped four-fold on their way to Poland on Friday, data from German network operator Gascade showed.
In terms of traditional market drivers, the UK market was over-supplied by 25 million cubic metres (mcm), National Grid data showed.
UK wind speeds are expected to increase over the weekend, lowering demand for gas from power plants.
“Gas-for-power demand is expected to be lower than previous forecasts and a few new LNG cargo arrivals are projected to increase north-west Europe send-out,” Refinitiv analysts said.
European Union carbon prices rose, with the benchmark December 2022 contract up 1.16 euros at 88.19 euros a tonne.
(Reporting by Nina Chestney)
