European wholesale gas prices surge 10% amid new fears over Russia supply

Gas was flowing eastward from Germany to Poland this morning, the reverse of the normal direction.

A gas pressure gauge of a main gas pipeline from Russia in the village of Boyarka near the capital Kiev, Ukraine. Picture: Sergei Chuzavkov/AP

European wholesale gas prices surged on signs that Russia will not deliver the boost in supplies president Vladimir Putin promised — at least not today.

Contracts traded in the Netherlands — a benchmark for the whole of Europe — surged almost 10% on Monday as gas orders via a key Russian pipeline signalled that shipments will remain well below normal. 

To make matters worse, gas was flowing eastward from Germany to Poland in early morning, the reverse of the normal direction.

Europe’s biggest supplier of the fuel had promised to send more gas to the region starting this week, with Mr Putin ordering Gazprom to fill its European storage sites following the completion of Russia’s domestic stockpiling campaign. 

Instead, the Russian gas giant said it will not sell any spot fuel at its sales platform this week, and there was also no extra capacity booked to send more supplies to Europe today in auctions held over the weekend. 

With Gazprom's production and exports near record highs, and its European storage at about one third of the levels of a year ago, some European politicians say Russia can do more to reduce prices and consumer bills.

They are concerned that Moscow is using the situation for political purposes, and accuse Russia of manipulating the market to push up prices. Russia denies this.

Asked about the possibility of additional gas supplies to Europe, Kremlin spokesman Dmitry Peskov said: "You need to reach out to Gazprom in regard to their day-to-day operations."

Gazprom did not reply to a Reuters request for comment.

Russia has denied withholding supplies to Europe to exert pressure on German regulators to approve gas shipments through the new Nord Stream 2 gas pipeline beneath the Baltic Sea.

Germany has until early January to certify the pipeline.

Meanwhile, US stocks traded close to record highs. Companies whose earnings are more closely tied to the economic cycle led the gains. 

The news flow last week, which also included passage of a $550bn infrastructure bill, washed away worries that high inflation and the Federal Reserve’s plan to curb bond purchases would upend growth. 

Results of Pfizer’s virus treatment and the lifting of US travel restrictions also boosted speculation companies will continue to have strong earnings. 

Bloomberg. Additional reporting by Reuters