European natural gas jumped as jitters over a short-lived rebellion in Russia added to supply fears in an already volatile market.
Benchmark futures rose as much as 13% on Monday. Gas has soared more than 30% this month with prolonged production outages in Norway to offset sluggish demand. Price volatility has increased in June, and the dramatic riot in Russia over the weekend is only likely to further roil the markets.
“Russian geopolitical risk is now significantly higher than before the weekend,” said Tom Marzec-Manser, head of gas analysis at ICIS in London. “The uncertainty of what could happen in the coming weeks within Russia itself, more than within Ukraine,” is driving the gas.
Although Europe has significantly reduced its dependence on Russian pipeline gas, Moscow remains a major supplier of liquefied natural gas. The continent also receives a large amount of LNG from other countries such as the US, and the fuel in general has been crucial to ensuring supplies during the energy crisis.
Other factors also add to market pressures. Shipping from Norway remains limited with several facilities undergoing maintenance. Seasonal work continues on major projects including the Nyhamna processing plant and the Troll field.
In Russia, there were signs that the situation was calming down. Moscow authorities lifted the so-called anti-terrorist regime that was put in place on Saturday when the Wagner group riot began. The Moscow Stock Exchange must operate normally. Oil in London was relatively flat with an advance of 0.7%, while wheat in Chicago rose 1.7%. US and European equity futures rose.
“Overall, like other commodities focused on Russia, the impact is limited at the moment,” said Ole Sloth Hansen, head of commodities strategy at Saxo Bank A/S.
First-month Dutch gas, the European benchmark, rose 13% to 36.80 euros per megawatt-hour at 9:25 a.m. in Amsterdam. The UK equivalent contract also increased by 13%.
–With the assistance of Stephen Stapczynski.
