Over 110 euros for gas with Gazprom closing the tap in Germany again

LAST UPDATE: 16:40

For the second day in a row, gas prices in Europe are rising sharply, as Gazprom further cut deliveries to Germany via Nord Stream, now by 60%.

Thus, after the jump of 18% yesterday, the contract for the July delivery of natural gas in Amsterdam (TTF) is today strengthened by 16.7%with its price now being set at 113.18 euros the megawatt hour.

Prices soared shortly before 5 a.m. It became known that after a 40% cut in gas shipments via the Nord Stream pipeline to Germany announced yesterday, Gazprom closed the tap again today, now reducing flows by 60% in total.

Earlier, it was reported that the Russian giant reduced by 15% gas exports to the Italian group Eni for today.

“Eni confirms that Gazprom has informed it of a limited reduction in gas supplies for today, which corresponds to about 15%,” said a spokesman for the Italian group, adding that “the reasons for the reduction have not been disclosed.”

Russian gas exports to Europe have been falling steadily since sanctions were imposed on Russia as Gazprom cut off gas supplies to many European customers who refused to pay in rubles.

Analysts at Commerzbank said earlier that the recent rise in prices was mainly due to Gazprom announcing that gas transports through the Nord Stream 1 pipeline would be reduced by 40% to just 100 million cubic meters per day as a turbine for a compressor station. “, which was sent to Canada for maintenance, has not yet been returned due to sanctions.”

“This threatens to undermine the very steady replenishment of stocks that has been observed lately,” he added.

Supply concerns are further exacerbated by the extension of the shutdown of Freeport LNG in the United States, one of the largest managers of liquefied natural gas (LNG) terminals, which will remove cargo deliveries to Europe.

“LNG news in particular is clearly a rising factor for the rest of the summer and winter,” one trader told Reuters.

Gas storage facilities in the European Union were 52.63% full, according to Gas Infrastructure Europe, but Europe will face a difficult winter even with full storage facilities, Commerzbank analysts have warned.

Insignificant losses for oil

Oil prices have been falling slightly in the meantime, amid worries about fuel demand and the wider economy ahead of the expected sharp rise in interest rates by the US Federal Reserve.

In a volatile session, brent futures for August fell 37 cents, or 0.3%, to $ 120.8 a barrel.

West Texas Intermediate for July delivery lost 77 cents, or 0.6%, at $ 118.11 a barrel.

Rising inflation has led investors and traders to prepare for a big move by the Fed this week – an increase of 75 basis points, which, if implemented, would be the largest rate hike in 28 years in the US. .

“A message of aggressive growth from the US Fed could heighten concerns about a global recession, which could limit demand in the energy market,” said a Daily FX analyst.

“If the Fed announces an increase in interest rates by 75 basis points today, oil prices could be particularly weak against the dollar in the short term, as an aggressive Fed could lead investors to the dollar and hit assets like oil,” he added.

In terms of demand, the recent rise in coronavirus cases in China has heightened concerns about a new phase of restrictions.

The country’s economy, however, showed signs of recovery in May after declining last month as industrial production rose unexpectedly.

In its monthly report, OPEC maintained estimates that global oil demand would exceed pre-pandemic levels in 2022.

“Overall, the supply / demand situation remains tight, and I can not see the reality changing until the global economy slows down sharply,” analysts said.

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