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European Gas Prices 

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With the Easter holidays approaching and Russian President Vladimir Putin remaining largely silent on a potential halt in European gas supplies, European natural gas prices have plummeted to their lowest level since the start of the Ukrainian conflict. 

Benchmark Dutch front-month gas futures fell up to 17% to 87.19 euros per megawatt-hour, the lowest intraday level since Feb. 23 – the day before Russia invaded Ukraine. Trading and demand typically fall in the run-up to the holidays. 

“Energy demand is down, with no apparent rush to bridge the Easter weekend trading lull.” 

Orders for gas transit through Ukraine rose on Thursday after falling earlier in the week, while the end of some outages in Norway also increased deliveries.

Nonetheless, the market remains intensely focused on Russian supplies, with the war raging and Putin demanding payment in rubles for his country’s gas supplies. 

Russia is the largest gas supplier to the European Union, and Moscow has previously threatened to halt shipments to buyers who do not comply with the edict. 

A reasonable replacement for Europe simply does not exist, Putin said in a televised speech Thursday, as he opened a meeting on Russia’s current energy challenges.

There are simply no spare volumes in the global market, and deliveries from other countries, particularly the United States, to Europe will cost consumers many times more.” 

More information: Putin claims that Europe has no immediate substitute for Russian gas. 

Putin did not reiterate his warnings about potential cutoffs at the meeting, but he did say his government is seeing “issues with payments for Russian export energy supplies, as banks from unfriendly states delay money transfers.” He didn’t go into detail. 

Putin’s demand for payment in rubles, according to the EU, would violate sanctions imposed on Moscow following the invasion of Ukraine.

According to a person familiar with the situation, the European Commission, the bloc’s executive arm, has presented its analysis of the decree, concluding that it would give Russia control over transactions. 

The decree requires European gas purchasers to open two accounts, one in foreign currency and one in rubles. Customers pay in foreign currency, which Gazprombank converts into rubles and then transfers to exporter Gazprom PJSC.

The majority of payments for April shipments, which must meet the new demands, are due next month, according to Russian Deputy Prime Minister Alexander Novak. 

While some buyers may decide that the new procedure is in accordance with their contracts, others may argue that it “exceeds their contractual obligations and refuse to follow it until and unless their contracts are adjusted,” according to Katja Yafimava, senior research fellow at the Oxford Institute for Energy Studies. 

“If the adjustment is not made by the next payment date, there is a very real risk that supplies will be cut,” she added.

The benchmark European gas futures contract settled 9.2 percent lower at 95.62 euros per megawatt-hour. The equivalent contract in the United Kingdom fell as much as 25% and closed down 17%. According to broker data, the day-ahead gas price in the United Kingdom fell 45 percent to the lowest since August.

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