Prices of gas in Europe rise following agreement on energy ceasefire

Dutch and British wholesale prices of gas rose on Wednesday, bouncing back from the previous day, after Russian President Vladimir Putin agreed to temporarily halt attacks on energy infrastructure but did not agree to a complete ceasefire.

According to LSEG, the Dutch front-month contract had risen by 1.41 euros at 42.13 Euros per Megawatt Hour (MWh) as of 0922 GMT. The May contract also rose by 2.08 Euros to 42.60 Euros/MWh.

The day-ahead contract in Britain was 3.25 pence more expensive at 103.25 cents per therm.

Yesterday, the market was awaiting the outcome of the phone call between U.S. president Donald Trump and Russian President Vladimir Putin.

Putin agreed to temporarily stop attacking Ukrainian energy installations on Tuesday, but refused to endorse the 30-day ceasefire Trump had hoped would serve as a first step towards a permanent peace agreement.

Prices have risen today, as Russia and Ukraine accuse each other of air strikes that caused damage to infrastructure. Lower temperatures are also expected in the first three weeks April.

A temporary halt to attacks on energy assets could ease gas supply disruptions in Ukraine. However, a complete ceasefire agreement would increase the likelihood of Russian pipeline gas returning to the market.

Goldman Sachs analysts said that "European Gas Markets remain stuck between tight physical markets and the possibility of an increase in Russian gas supplies."

The authors added that "in our opinion, the gas storage levels at end-March are too low to allow European inventories reach 90% by summer."

The storage levels could reach 80%, which is enough for next winter. However, prices must remain high to keep LNG imports strong.

The benchmark contract on the European carbon markets was 1,33 euros higher, at 72.63 euro per metric ton. Nina Chestney reports.

(source: Reuters)