European Gas Fluctuates as Traders Weigh Supply Cut, Demand Drop

(Bloomberg) — European natural gas prices swung between gains and losses as traders weighed signs that high fuel costs are curbing industrial demand against Russian supply cuts. 

Benchmark futures rose 1.2% after dropping as much as 2%. Prices are still about eight times higher than the seasonal average, causing industry to slash consumption. In the UK, industrial gas use has fallen by about 49% this year, “roughly the same order of magnitude below pre-pandemic demand,” Citigroup Inc. said.

Prices have steadied after being roiled over the past week when Russia further tightened its squeeze on gas flows to the continent, a move that prompted some nations to resort to coal for power. Italy, one of the biggest buyers of Russian gas, is temporarily increasing coal-fired generation, joining nations such as Germany, Austria and the Netherlands in a revival of mothballed power stations or removing limits on the dirtier-burning fuel.

Gazprom PJSC’s (MCX:) shipments through Nord Stream — the biggest pipeline to the European Union — remain at about 40% of capacity, causing reduction in supplies to buyers in Germany, France, Italy, and some other nations.  

Canada, where a Nord Stream turbine is stranded for repairs, is in talks with Germany on how to respect the sanctions imposed on Russia over its invasion in Ukraine without hurting its ally. The turbines were manufactured in Canada and need to be regularly sent back there for maintenance by Germany’s Siemens (NS:) Energy AG. 

Canada Working With Germany on Options to Restore Vital Gas Flow

, the European benchmark, rose 1.2% to 127 euros per megawatt-hour at 9:09 a.m. in Amsterdam. They rose 4.1% on Tuesday. 

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