Europe’s benchmark gas prices increased, reversing earlier declines, as traders remain undetermined on how to react to Russia’s attempts to increase exports.
Futures have been volatile in recent days, diving to half of last week’s record level earlier Tuesday, following expectation of increased Russian supply and milder weather. Energy markets have only “grown more uncertain” since late September, Citigroup Inc. wrote in a note.
The bank raised its natural gas price forecast as it sees limited evidence that Russia has capacity to ramp up exports while weather uncertainties continue.
Dutch front-month rose 1.7% to 86.67 euros a megawatt-hour as of 4:05 p.m. in Amsterdam, after sinking as much as 5% earlier. The U.K. equivalent gained 2% to 221 pence a therm, giving up declines of as much as 4%.
Gazprom PJSC has started to withdraw gas from storage, Deputy Foreign Minister Sergei Ryabkov said in an interview with the BBC. Russian President Vladimir Putin claimed last week that the country can potentially ship record volumes this year. The intervention helped push down prices, adding to signs this week that Europe’s gas storages are starting to fill up at a fast pace.
“Variable gas supply fundamentals have been sending markets into overdrive,” consultant Inspired Energy wrote in a note. But Putin’s comments are likely having an impact, it said.
An outlook for mild weather across much of Europe has also relieved pressure on the market, with German power prices for next month and next year falling on Tuesday.