Prices up after Putin asked “unfriendly” buyers to pay in rubles

European gas balances remained comfortable yesterday, thanks in particular to strong pipeline supply. Indeed, Russian flows were up, averaging 269 mm cm/day, compared to 253 mm cm/day on Wednesday. Norwegian flows increased to 325 mm cm/day on average, compared to 319 mm cm/day on Wednesday. 

But it was Moscow’s statements that captured the market’s full attention. Russian President Putin asked “unfriendly” foreign buyers to pay for Russian gas in rubles from today or else have their supplies cut.

Putin said these buyers “must open ruble accounts in Russian banks. It is from these accounts that payments will be made for gas delivered starting from April 1”. “If such payments are not made, we will consider this a default on the part of buyers, with all the ensuing consequences”.

It was not immediately clear whether in practice there might be a way for foreign firms to continue payment without using rubles, which the European Union and G7 have ruled out. But the market has revised upwards the probability of an interruption of Russian supply, pushing prices up.

At the close, NBP ICE May 2022 prices increased by 12.740 p/th day-on-day (+4.45%), to 299.320 p/th. TTF ICE May 2022 prices were up by €6.08 (+5.07%), closing at €125.906/MWh. On the far curve, TTF ICE Cal 2023 prices were up by €1.42  (+2.01%), closing at €72.079/MWh. 

In Asia, JKM spot prices dropped by 5.30%, to €109.542/MWh; May 2022 prices increased by 4.62%, to €109.272/MWh.

TTF ICE May 2022 prices broke yesterday the resistance of the 5-day High. They are up again this morning but are finding a resistance around the 20-day average (€128.55/MWh). Note that, with a higher probability of an interruption of Russian supply, there is now a higher probability for prices to rise towards the 1-Year High (€159.75/MWh for today) or the 20-day High (€164.01/MWh for today). But the maximum gasoil switching level (currently around €135MWh) can still prevent prices from reaching those levels by triggering demand destruction.

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