The staggering rush in gas prices, which have jumped around 60% over the past two days, appears to have finally come to a halt after the Russian president Vladimir Putin announced an increase in supplies to Europe, including via Ukraine. Contracts in the Netherlands and Great Britain futures on deliveries plummeted by more than 7% and an 8% decline was also recorded by natural gas prices in the United States, which on Tuesday had risen to a 12-year high.
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Putin’s words and the immediate effect on the energy markets
“Russia will increase supplies to Europe, including through Ukraine, to cope with the energy crisis and is ready to stabilize the market” in the face of the surge in prices. The words of Russian President Vladimir Putin therefore had an immediate effect on natural gas and energy prices.
Putin stressed that the current crisis is also due to the (short-sighted) European strategy of suspending long-term contracts in favor of commercials, a strategy that is now presenting the bill. Gas sales to Europe – Putin added – could therefore hit a new historical record this year and supplies through Ukraine will exceed the volumes envisaged by the contract of Gazprom, the energy arm of the Russian state, with Kiev. The price of gas, after Putin’s words, reversed its course and fell by 7% (November futures price): in the morning on the Dutch Title Transfer Facility reference platform, gas reached 160 euros per megawatt hour.
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Stock exchanges and inflation
The rapid fall in prices, after a week of almost uninterrupted gains, highlights the great volatility of the energy markets, volatility that is fueling fears of a worldwide inflation rush that could curb the strength of the recovery. In bag, the effect of Putin’s words contributed to halving the losses of the indices compared to the lows of the day when, in the last hours of trading, the rally in natural gas stopped.
The inflation risk however it persists and scares the markets. European equity markets had a difficult day: in Milan, the Ftse Mib thus lost 1.35% (here, the stock markets in real time).
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Gazprom’s moves in Ukraine
By turning to natural gas, Gazprom will set a new gas supply record to Europe this year and is exceeding its contractual obligations, as Russian President Vladimir Putin pointed out: by sending 40 billion cubic meters of gas through Ukraine, Gazprom exceeds the contractual limits by “more than 8%”.
Putin, who spoke at a meeting with CEOs of Russian energy companies about the development of the sector, said Gazprom is stepping up gas pumping through the Ukrainian pipeline and is likely to exceed its contractual obligations, even if it will not be profitable. increase it further. «We are witnessing all kinds of speculation on the subject of the Ukrainian gas transport system, on supplies through it. But I would also like to note here now: our contract obligations for supplies through the Ukrainian gas transportation system are 40 billion cubic meters of gas per year, and 9 million this year. Gazprom has increased these supplies, this pumping, to be more precise, by over 8%. And we can confidently say that we will exceed our contractual obligations to supply gas through the territory of Ukraine ”. Putin pointed out, however, that “it is not profitable for Gazprom to increase them further, because it is more expensive. Pumping through the new systems is significantly cheaper, by about 3 billion dollars a year compared to the corresponding supply volumes ».
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