Gas Rally Halts – Down 7.9%

European gas prices halted their rally on Wednesday as Norway’s oil and gas unions agreed to end strike action while Germany took steps to ease its supply shortage, Bloomberg reported.

Against this backdrop, the Dutch contract – the European benchmark – fell as much as 7.9% to 152 euros per megawatt hour, after five days of upward movement.

Europe is facing its biggest energy crisis in decades, with Russia – the region’s main supplier – cutting gas flows as tensions rise over the war in Ukraine and subsequent sanctions. The prospect of limited supplies from Norway had helped boost prices.

It is noted that the Norwegian government announced yesterday Tuesday that it referred the dispute between oil and gas sector workers and their employer to an independent mediation institution, thereby forcing by virtue of legislation in the country to end the mobilization. The government decided to intervene after the strike shut down three small oil and gas fields in the North Sea yesterday and as Norway’s powerful trade union Lederne announced it would continue strike action in the coming days, demanding better wages.

Meanwhile, Germany’s cabinet on Tuesday rushed through legislation allowing it to bail out struggling energy companies in a bid to limit the impact of the supply crisis. The measure, which heads to parliament this week, includes a mechanism to pass on some of the rising cost of natural gas to consumers, although it will not take effect immediately.

Meanwhile, Germany is preparing for this month’s scheduled maintenance of the Nord Stream pipeline, the main natural gas pipeline from Russia. Goldman Sachs said this week that it no longer sees full restoration of flows as the most likely scenario after the maintenance work.