Wholesale gas prices fell in Europe after Russian gas flows resumed to Germany, raising hopes that Moscow is carrying out a pledge to increase supplies and ease concerns about shortages and high prices before winter.
Russia started pumping gas to Germany again late on Monday via a pipeline from Yamal in Siberia, a day after a halt in exports had pushed up prices in Europe. The gas flows later rose to their highest level in almost two weeks, German data showed.
Russia provides a third of Europe's gas and its supply intentions are critical at a time when a surge in spot prices has hit households and businesses alike, underlining Europe's heavy dependence on Moscow for its energy supplies.
Russian president Vladimir Putin ordered state gas company Gazprom this month to increase supplies to Europe and rebuild its inventories there once domestic storage tanks are replenished.
In a sign it is starting to carry out that order, Gazprom said it had begun pumping gas to five European underground gas storages for November.
Though wholesale prices in EU countries fell, market analysts said a bigger drop in prices would depend on Russia doing more to ease European concerns, and on how cold the coming winter is.
"So, until those concerns go away, prices will stay high," said Trevor Sikorski, an analyst at consultancy Energy Aspects.
Dmitry Marinchenko, senior director at Fitch ratings agency, said Gazprom would need to pump around 170 million cubic metres (mcm) more of gas each day for a month, an increase of about a third on what it is shipping now, to get its European storage refilled.
"For such a serious increase in supplies, Gazprom would have to book additional transit capacity via Ukraine — the Nord Stream 1 and Yamal-Europe (pipelines) would not be enough," said Mr Marinchenko.
An official with the Ukrainian gas transmission system said Gazprom had made a request to ship 100.2mcm per day via Ukraine. That is less than the 110mcm per day it has already paid for but more than the shipments of 56-64mcm per day seen at the start of November.
If Gazprom wants to go over the contracted volumes, it must book additional capacity at auctions separately via Ukraine and for the Yamal-Europe pipeline. It has refrained from doing so at recent auctions.
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, oil prices edged up as the US lifting of travel restrictions and more signs of a global post-pandemic recovery boosted the demand outlook, while supply remained tight.
The rally came ahead of the US Energy Information Administration's release of oil and gasoline price predictions in its short term energy outlook, which US president Joe Biden's administration has said it would use to determine whether to release oil from the nation's Strategic Petroleum Reserve.
Brent rose 61 cents, or 0.7%, to $84.04 a barrel.