European gas falters as traders weigh supply cuts and demand slump

European natural gas prices fluctuated between gains and losses as traders weighed signs that high fuel costs are dampening industrial demand against Russian supply cuts.

Enchmark futures rose 1.2 percent after falling as much as 2 percent. Prices are still around eight times above the seasonal average, prompting the industry to limit consumption. In the UK, industrial gas consumption is down about 49 percent this year, “about the same magnitude below pre-pandemic demand,” Citigroup Inc said.

Prices have stabilized after being shaken up last week as Russia continued to tighten its squeeze on gas supplies to the continent, a move that prompted some nations to resort to coal as an energy source. Italy, one of the biggest buyers of Russian gas, is temporarily boosting coal-fired power generation, joining nations like Germany, Austria and the Netherlands in reviving mothballed power plants or lifting restrictions on the dirtier fuel.

Gazprom PJSC’s deliveries through Nord Stream – the largest pipeline into the European Union – remain at about 40 percent capacity, leading to a reduction in deliveries to buyers in Germany, France, Italy and some other countries.

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

Canada is working with Germany on options to restore vital gas flow

Dutch front-month gas futures, the European benchmark, rose 1.2 percent to 127 euros a megawatt-hour as of 9:09 am in Amsterdam. They rose 4.1 percent on Tuesday.