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31 Aug, 2022 08:03

European gas prices surge as Russia reduces supplies

The key pipeline to the EU has been shut down for 72-hour maintenance
European gas prices surge as Russia reduces supplies

European spot prices for natural gas rose in early trading on Wednesday after Russian energy major Gazprom shut down supplies via the Nord Stream 1 pipeline.

According to the Intercontinental Exchange data, the price of October gas futures on the TTF hub in the Netherlands rose 5.5% to €280 ($280) per megawatt-hour, or $2,906 per thousand cubic meters, at around 07:00 GMT, after falling below $2,600 the day before.

Earlier on Wednesday, Gazprom confirmed the temporary halt of natural gas deliveries to Europe via Nord Stream 1 due to scheduled maintenance. Unless there are technical setbacks, the gas flow will be resumed on September 3, with supply volumes restored to 33 million cubic meters per day, or roughly 20% of the pipeline’s full capacity.

Following Gazprom’s announcement on August 19 regarding the temporary suspension, gas prices reacted sharply. Last week, the price of September futures exceeded $3,500 per thousand cubic meters.

However, after German Economy Minister Robert Habeck announced that the country’s underground gas storages were 85% filled ahead of schedule, the gas price rally somewhat subsided.

Gas prices reversed their gains later in the day, trading at $2,445 per thousand cubic meters at around 12:50 GMT.

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