European natural gas prices have been on the slide for several days now as an early start of summer combines with ample LNG supplies to quench supply worries.
According to a Bloomberg report, natural gas prices in Europe have been on the decline for five days now as demand eases while supply remains strong thanks to LNG and continued deliveries by Gazprom via Ukraine and the Nord Stream 1 pipeline.
Europe became the biggest buyer of U.S. liquefied natural gas a few months ago as it sought to reduce its dependence on Russian gas even before Russia's invasion of Ukraine. This has led to a spike not only in gas prices but also in LNG carrier rates, which recently hit the highest in a decade.
Despite the lower demand, gas prices in Europe remain quite elevated as importers seek to refill their reserves ahead of the next heating season. Some of these might be worse off than others as Gazprom suspended deliveries to Poland, Bulgaria, the Netherlands, and Denmark over their refusal to pay for the gas in rubles.
Still, most of the large gas buyers that supply European countries with natural gas from Gazprom have accepted the latter's payment terms, ensuring the uninterrupted supply of gas. According to unnamed sources cited by Bloomberg today, Gazprom was unlikely to cut off supplies to any other European buyers for now.
The European Union, however, remains determined to reduce its imports of Russian gas. Reluctant to impose an outright embargo on the commodity, the European Commission recently started looking into putting a cap on imported Russian gas prices.
The idea aims to, on the one hand, reduce the EU's gas bill and, on the other, to cut Russia's natural gas sales income as a form of punishment for Moscow's invasion of the Ukraine.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More