Gas prices ease on hopes Russia will step in to stabilize market

Image from  Financial Times

Global gas markets recovered from a day of turmoil and equities climbed on Thursday, as investors banked that Russia would help Europe avoid a full-blown energy crisis. European and UK gas prices eased in early trading after a chaotic Wednesday when UK futures contracts climbed almost 40 per cent before Russian president Vladimir Putin said his country was prepared to stabilise the market. 

UK gas contracts for November delivery, which shot up almost 40 per cent on to reach more than £4 per therm on Wednesday, were down 18 per cent at £2.23 therm on Thursday. European TTF contract for November delivery slipped 21 per cent at €90.50 per megawatt hour. Signs that Russia may be prepared to help were enough for European equities to rebound in morning trading on Thursday. The benchmark Stoxx 600 share index gained 1.1 per cent while London’s FTSE 100 rose 1 per cent. 

Surging gas prices, unleashed by a combination of the global economy’s recovery from the pandemic, a shortage of supplies and longstanding efforts to reduce the use of fossil fuels, are threatening to slow economic growth and fuel inflation.

Russia, a major supplier of gas to Europe, has been accused by some European politicians of deliberately withholding supplies in an effort to win approval of the controversial Nord Stream 2 pipeline, which would send the fuel directly to Germany. Alexander Novak, Russia’s energy minister, said on Wednesday that certifying the recently completed pipeline would give a “positive signal” that could “cool down the current situation somewhat”.  Novak suggested that increasing gas trading volumes on an electronic platform in St Petersburg run by Gazprom, Russia’s state-owned energy company, “could curb the speculative effect” on prices.

Credit : FT.com