Natural gas prices in Europe edged lower as high levels of liquefied natural gas imports are helping replenish stockpiles and easing concerns over supply.
Benchmark futures fell as much as 3%, after rising in the two previous sessions as buyers of Russian gas tried to unravel how they would keep paying for the fuel without breaching sanctions. At least 10 LNG tankers are expected to reach European ports by month-end, ship-tracking data on Bloomberg and port data show.
Europe’s gas inventories have risen to near their seasonal levels after being depleted to dangerously low levels over the winter. Companies are pumping the fuel into storage to guard against any disruption in Russian supplies with the European Union giving mixed signals to buyers on Moscow’s new payment mechanism.
Storages were almost 41% full on Tuesday, close to the 44% five-year average and up from 33% at the beginning of the month, according to Gas Infrastructure Europe.
The market remains wary with payment deadlines for Russian gas fast approaching. Moscow has already cut off supplies to Poland and Bulgaria, and Finland has said there’s a “real risk” that flows will end this week as it’s refusing to pay in rubles.
Some other buyers in the region, including Eni SpA and Uniper SE, see the possibility of being compliant both with Moscow’s demand and EU sanctions law. Eni said this week it was opening accounts in both euros and rubles with Gazprombank JSC to keep gas flowing. Russian Deputy Prime Minister Alexander Novak said Thursday that about half of the 54 buyers of gas have opened these accounts.
But companies are also making alternative arrangements. Uniper, one of the largest Russian gas buyers, is expanding its LNG portfolio and procuring additional volumes from various countries, according to Chief Executive Officer Klaus-Dieter Maubach. “In this way, we are helping to make Germany’s energy supply more secure,” he said at the company’s annual general meeting Wednesday. Italy’s Eni has secured LNG supplies from Africa.
Meanwhile, Russian gas shipments to Europe through Ukraine are expected to edge higher on Thursday based on orders, but are still lower than usual. Supplies via Nord Stream, the biggest gas pipeline from Russia to Europe, remain stable.
Dutch front-month gas, the European benchmark, was 0.2% lower at 94.33 euros per megawatt-hour as of 10:09 a.m. in Amsterdam. The U.K. equivalent declined 6% to 171 pence a therm.