Wholesale gas prices fall to lowest levels since invasion of Ukraine

Natural gas prices in Europe have settled at their lowest levels since the start of the Ukraine war as imports of liquefied natural gas help replenish inventories and allay supply concerns.

Dutch enchmark front-month futures closed 3.7 percent lower at €91.02 per megawatt-hour, the lowest settlement price since Feb. 23 – the day before the Russian invasion. The UK equivalent fell 7.3 percent.

At least 10 LNG tankers are expected to reach European ports by the end of the month, vessel tracking data on Bloomberg and port data shows. Regardless, buyers of Russian gas are still figuring out how to pay for the fuel — which Moscow’s decree requires must be in rubles — without violating sanctions.

European gas stocks have risen to near seasonal levels after falling to historic lows over the winter. Companies are pumping the fuel into stockpiles to guard against potential disruption from Russia, the continent’s key supplier.

Storage locations were nearly 41 percent full Tuesday, near the five-year average of 44 percent. That’s up 33 percent at the start of the month, according to Gas Infrastructure Europe.

European Union lawmakers and nations have reached an agreement to set a minimum stockpile of natural gas before winter. Storage operators must maintain a minimum level of 80 percent before November 1 and increase to 90 percent for the following winters.

The market remains skeptical as payment deadlines for Russian gas are fast approaching. Moscow has already halted supplies to Poland and Bulgaria, and Finland said there was a “real risk” that supplies would end this week as it refused to pay in rubles.

Some other buyers in the region, including Eni SpA and Uniper SE, see an opportunity to comply with both Moscow’s demand and EU sanctions. Eni said this week it will open accounts in euros and rubles with Gazprombank JSC to keep gas flowing. Russian Deputy Prime Minister Alexander Novak said yesterday that about half of the 54 gas buyers have opened these accounts.

Businesses are also taking alternative precautions. Uniper, one of the largest Russian gas buyers, is expanding its LNG portfolio and procuring additional quantities from different countries, according to CEO Klaus-Dieter Maubach. “In this way we are helping to make Germany’s energy supply more secure,” he said on Wednesday at the company’s annual general meeting.

Italy’s Eni has secured LNG supplies from Africa.

Meanwhile, Russian gas supplies to Europe through Ukraine were expected to rise on the back of orders but are still lower than usual. Deliveries via Nord Stream, the largest gas pipeline from Russia to Europe, remain stable.