Europe gas rises 60% with traders backing away from Russia deals

Bloomberg

European natural gas surged to a record as supply fears were compounded by traders trying to avoid exposure to a key Russian player in the market.
Benchmark futures rose as much as 60%, before easing. Gas and power traders are backing away from new deals with Gazprom Marketing & Trading Ltd, according to people familiar with the matter. There’s a further risk that companies start unwinding previously agreed contracts or clearing houses decide to stop doing business with the Russian company, liquidating their positions. Gazprom M&T denied that companies are cutting trading with them.
The war has sent commodity prices soaring — with Brent crude topping $113 a barrel — as buyers, traders and shippers remain wary of dealing with Russian supplies. Disruptions in gas supplies could also come from damage to infrastructure in Ukraine, but the risk of sanctions applying to energy “remains a real possibility,” said Kaushal Ramesh, a senior analyst at Rystad Energy.
But for now Russian flows continue, and have even increased since the invasion of Ukraine. Shipments arriving at the key European entry point of Velke Kapusany in Slovakia have rebounded to normal levels and gas flowed to Germany via the Yamal-Europe pipeline overnight.
The price spike is similar to when gas rose to a then record high on December 21, which was assumed to be because of “participants covering positions,” said Tom Marzec-Manser, an analyst for European gas and LNG at ICIS.
Halting dealings with Gazprom Marketing & Trading, which is involved in power and LNG trading, could send ripples through the energy market. The company’s retail unit supplied gas to more than 177,000 industrial and commercial sites in the UK in 2020, according to the trader’s annual report. It also had agreements to ship gas to end-users in France and the Netherlands.