European natural gas prices hit their highest this year this week after Ukrainian forces seized the last transit point for Russian gas to reach Europe.
Prices rose for at least a third consecutive day, topping 40 euros ($43.71) per megawatt-hour for the first time since Dec. 4, 2023, according to Dutch banking group ING.
The spike is linked to a surprise Ukrainian incursion into Russia's southwestern Kursk region on Tuesday and a reported takeover of a gas metering station in the town of Suzha, where Russian gas flows into Europe via Ukraine.
Despite the border clashes, Ukrainian gas transit operator and Russia's Gazprom have given assurances that energy shipments due to expire at the end of 2024 will continue through Ukraine.
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Gazprom reported that gas supplies to Europe increased to 38.5 million cubic meters on Friday, from 37.3 million cubic meters on Thursday.
Following the announcement, wholesale natural gas prices in the Netherlands fell below 40 euros, and analysts predicted the impact on European natural gas supplies over the winter would be limited.
“European storage is more than 86 percent full, well above the five-year average of 78 percent, and we expect storage to be close to 100 percent full ahead of winter,” ING said.
Fitch Ratings noted that the stockpile would cover almost half of Europe's gas consumption from October 2024 to March 2025, adding that it “expects any price impact from Ukraine's aggression in the Kursk region to be short-lived.”
But Gazprom spokesman Sergey Kupriyanov said some analysts expected European gas prices could rise further as the skirmish at Kursk continues.
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