The price of European gas has dropped to its lowest level since Russian invasion of Ukraine

Before reducing some of those losses, benchmark Dutch gas futures plummeted as much as 12% to 84 euros per megawatt hour, the lowest level since Feb. 23, the day before the Russian invasion. On April 14, ahead of the Easter holidays, the front-month contract settled 9.2 percent lower.

Following President Vladimir Putin’s demand last month that “unfriendly” purchasers pay for gas in rubles, the market has been focused on shipments from Russia, the country’s main supplier. The attorneys for the European Union have drafted a preliminary judgment that the payment system would be in violation of the bloc’s penalties.

Europe still has “some time” to pay for Russian gas imports in rubles, with payments for April shipments due “sometime in May,” according to Kremlin spokesman Dmitry Peskov. He wouldn’t say whether any clients have agreed to pay in rubles or open accounts as required.

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According to Maxar, above-average temperatures in southeast Europe are expected to spread towards the mid-continent next week. This could help to relieve some burden on natural gas demand. The forecaster stated that Iberia will be colder than usual.

Even before the conflict in Ukraine, Europe was facing an energy shortage and was competing with Asia for liquefied natural gas cargoes. As a result of pandemic-related lockdowns, spot LNG prices in northeast Asia have fallen.

“As short-term fundamentals degrade, gas prices have come down quite a bit,” Edmund Siau, head analyst for gas and LNG at consultancy FGE, said. Demand destruction and fuel switching have lowered European gas costs, but he warns that competition from Asia is on the horizon. “Traders are worried what Asia will do about China’s lockdowns and how they will resupply before the winter,” he said.

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Despite this, Russian natural gas flows to Europe via Ukraine are projected to be below capacity on Tuesday, following a reduction in supply orders prior to Easter. The shipments of Gazprom PJSC are in line with client requests, according to the company.

While gas has been coming in Ukraine from Russia’s Sokhranovka network point in recent days, flows from the Sudzha station have dropped. Grid data shows that flows via the Nord Stream link are stable.