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European natural gas prices rose after U.S. President Joe Biden said the controversial Nord Stream 2 pipeline won’t move forward if Russia invades Ukraine. Russian flows through a key route also declined.
Dutch front-month gas futures rose as much as 4.3% to 83 euros a megawatt-hour. They traded 3.5% higher by 10:12 a.m. in Amsterdam. Benchmark prices in the U.K. rose by 3.1%
Europe is grappling with an energy crisis largely due to limited supplies compounded with increasing demand, which has left the region’s inventories at historically low levels. The situation has been exacerbated by reduced flows from Russia while geopolitical tensions surrounding Ukraine intensify.
“The U.S. continued to turn up the heat on European energy security,” consultant Alfa Energy Ltd. in a report on Tuesday.
Traders are on edge with the prospect that Europe will not be able to count on Nord Stream 2 to alleviate Europe’s energy crisis. The pipeline to bring more gas directly from Russia to Germany would be stopped if President Vladimir Putin orders an invasion of Ukraine, Biden said at a joint news conference at the White House on Monday with German Chancellor Olaf Scholz.
While Russia has amassed more than 100,000 troops along the border, Putin has repeatedly said there are no plans for an invasion. Nord Stream 2 is currently under regulatory review.
Russia is Europe’s primary gas supplier. Its flows to the continent via a route crossing Ukraine fell after gaining on Monday. There are still no flows through the important Yamal-Europe pipeline to Germany.
Meanwhile, LNG flows at U.K. terminals have jumped 15% so far this month. Above-normal and unseasonably mild temperatures across Europe forecast for next week are expected to limit demand.