Gas swings as EU mulls new sanctions against Russia

[LONDON] Natural gas prices in Europe fluctuated as traders weighed threats to supplies amid mounting calls for new sanctions against Russia.

Benchmark futures swung between gains and losses, after jumping as much as 7 per cent earlier. Some European Union members are pushing for the group to quickly impose new penalties against Moscow after reports of atrocities near Kyiv.

There were clear signs of Russian war crimes in Ukraine that demand a new round of sanctions, French President Emmanuel Macron said during a radio interview. Over the next few days, the EU will discuss new measures, including possible sanctions on Russian oil and coal, he said.

German Defence Minister Christine Lambrecht said over the weekend that the bloc should talk about ending Russian gas purchases. Still, for now shipments from Russia via key pipeline routes remain broadly stable, which, together with high wind output in some parts of Europe, are keeping prices in check.

Colder temperatures are also set to ease later in the week, forecaster Maxar said, which would reduce demand for gas. There's been no disruption in Russian gas supplies so far, "but the market will certainly remain extremely volatile in the coming days as everyone continues to follow the news", trading group Energi Danmark said in a note on its website.

Traders are watching moves from both Russia and its gas buyers 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.

Dutch front-month gas, the European benchmark, was up 1.3 per cent at 113.65 euros a megawatt-hour by 10 am in Amsterdam, after posting its first weekly gain in a month last week. The UK equivalent contract rose 3 per cent. "Geopolitical risk may keep gas prices higher for longer," Bloomberg Intelligence analysts Henik Fung and Chia Cheng Chen said in a note. "The Kremlin's call for 'unfriendly' European countries to pay for Russian gas in roubles raises the stakes for supply and the spectre of disruption."

BLOOMBERG