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The European natural gas benchmark prices tumbled by 15% early on Friday after Russia’s gas giant Gazprom booked last-minute capacity on a pipeline to ship extra gas to Germany via Poland in the coming days.
The benchmark price for Europe at the Dutch Title Transfer Facility (TTF) has seen some wild swings this week, most of which as a result of news and reports about current and expected Russian gas supply to Europe. This highlights the sensitivity of European gas prices to Russian gas shipments amid the lowest levels of gas in European storage in a decade.
Traders are watching closely every tender in which Gazprom is set to book pipeline capacity via the main pipeline routes to Germany and Poland. Every time Russia doesn’t book too much additional capacity, Europe’s benchmark gas prices jump.
The market is also closely following the daily natural gas flows on the Yamal-Europe pipeline.
Earlier this week, Europe’s gas prices surged again to near-record highs after Germany indicated it had no intention of approving Nord Stream 2 before requirements under German law were satisfied.
However, Foreign Minister Annalena Baerbock also said that the situation in Ukraine was also a factor in the German government’s decision on the matter.
On Thursday, the German regulator reviewing the certification of Nord Stream 2 said it would not make a decision before July 2022.
On Friday, however, the market was calmed (for now) by Gazprom booking in the last minute around 30 percent of pipeline capacity to deliver gas to Germany in within-day auctions.
As a result, the European gas prices opened down by 10% on Friday, having hit a fresh record closing high yesterday of over $45/MMBtu, Ole Hansen, Head of Commodity Strategy at Saxo Bank, said.
The benchmark price at the Dutch hub could slump further if Russia finally decides “to turn up the taps” and start shipping extra gas on top of its contract obligations, Hansen told Bloomberg.
