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Prices spike on Russian invasion of Ukraine -Breaking


© Reuters. FILEPHOTO: An employee climbs onto a cylinder at the Yamal Europe gas compressor station, near Nesvizh in southwest Minsk on December 29, 2006. REUTERS/Vasily Federosenko/File photo

Nina Chestney

LONDON, (Reuters) – British and Dutch gas prices jumped on Thursday along with other commodities after the invasion of Ukraine by Russian forces.

Russian forces launched missiles at several locations in Ukraine, and troops landed on the coast of Ukraine on Thursday. Officials and media reported that this was done after President Vladimir Putin approved what he called an “exceptional military operation in east”.

Dutch gas market: Front-month contract up 39%, at 117.15 Euros per megawatthour (MWh) 1155 GMT. But still below December’s record low of just 185 EUR/MWh.

While the summer 2022 price went up by 38% to 114.85 euro/MWh, the winter 2022 contract saw a 30% increase at 114.00 euro/MWh.

The March gas price in the UK was at 283.50 pence per the therm. Winter 2022 prices were up 31% to 290.00p/therm.

Prices for oil rose and exceeded $105 per barrel, the highest level since 2014. [O/R]

This is panic buying. One gas trader stated that an invasion was widely anticipated.

Russian gas exports to Ukraine via Russia have been normal, according to Gazprom (MCX).

Naftogaz Ukraine, an energy company, stated that systemic shelling hasn’t affected the country’s electricity infrastructure and that it is now under control.

On Thursday, the Yamal Europe pipeline cut off half of the eastbound flow that was heading to Poland. It happened on the same day as Moscow instigated the invasion of Ukraine.

Although it was not clear if the flow drops were due to events in Ukraine (another major route for Russian gaz exports to Europe), Gazprom, Russia’s state-owned gas company declined to comment immediately.

Russia exports around 180 billion cubic metres of gas per year to Europe, Ukraine and other European countries.

As a transit hub, Ukraine represents around 40% of Russian supply (roughly 20%), according to Allen Good from financial services company Morningstar.

He stated that “Halting Ukraine supplies for two weeks would have an impact of a little under 2 billion cubic meters, which could easily be managed with slightly higher LNG supply levels and gas storage levels in Europe.”

“U.S. LNG capacity is essentially running at near 100% capacity currently, but Morningstar believe there’s room to temporarily exceed nameplate capacity to provide additional supply on a short-term basis.”

Meanwhile, carbon prices in Europe fell. The benchmark December 2022 contract dropped 8% to 87.52 euro per tonne.

Marcus Ferdinand of Greenfact market intelligence firm, was the head analyst and suggested that this drop might be due to speculative sales, as well margin calls. This is because the energy complex has risen rapidly.

“Some traders were forced to dispose of some positions in order to preserve their positions. They also had to get rid of some carbon assets,” he said.

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