European wholesale gas prices continued to rise during the first trading day of the year. On the Dutch futures market – the European benchmark – natural gas for delivery in February briefly approached 51 euros per megawatt hour on Thursday morning, the highest level since October 2023.
The market is reacting to the announcement of the end of Russian gas deliveries by pipeline to Europe via Ukraine. On Wednesday, the gas tap was closed because kyiv, which has been defending itself against a Russian invasion since February 2022, did not want to renew the contract signed in 2019.
This stop, which concerns almost a third of total Russian gas deliveries to Europe, worries several Eastern European countries, notably Moldova, particularly vulnerable, and Slovakia which has warned of serious consequences.
Gas exports to Europe via Ukrainian territory amounted to just over 14 billion cubic meters per year, according to official figures.
In this tense context, the price of European gas reached the symbolic mark of 50 euros per megawatt hour on Tuesday, a first in more than a year.
While this represents only a small part (5%) of natural gas demand in Europe, which has been importing more expensive liquefied natural gas (LNG) since the war in Ukraine, the expiring contract had already caused some nervousness these last few days. The extent of the decline in gas reserves in Europe – particularly in the countries most affected by the shutdown – and the need to replenish them over the summer are now being studied.
Several countries in Europe are experiencing freezing temperatures at the same time, leading to an increase in heating needs and therefore demand for natural gas.
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