With warmer weather and signs in Russia that the cost of fuel is not expected to be paid in rubles until next month, natural gas prices in Europe continue to fall to their lowest level since the start of the war between Russia and Ukraine.

Benchmark Dutch natural gas futures fell 12 per cent to 84 per trillion watt-hour at one point, the lowest level since the day before the Russian-Ukrainian war broke out on February 23rd, narrowing to 1.8 per cent as of press time. The recent-month contract fell for the second trading day in a row after falling 9.2 per cent on April 14, before the Easter holiday.

The market has been watching shipments from Russia, its biggest supplier, especially after Russian President Vladimir Putin last month asked "unfriendly" buyers to pay for natural gas in rubles. EU lawyers have drafted a preliminary ruling that the payment mechanism violates EU sanctions.

Kremlin spokesman Dmitry Peskov said on Monday that there is still some time in Europe to pay for Russian natural gas in rubles, and the April payment is mainly due sometime in May. He declined to comment on whether any customers agreed to pay in rubles or open accounts in accordance with the regulations.

Higher-than-average temperatures in southeastern Europe will expand to central Europe next week, Maxar said in a report. This may ease the pressure on natural gas demand to some extent. The weatherman added that the Iberian peninsula would be colder than usual.

Moderate fundamentals

Even before the war between Russia and Ukraine, Europe was dealing with the energy supply crisis and competing with Asia for liquefied natural gas. Spot prices of liquefied natural gas in Northeast Asia have been low as epidemic-related blockades have depressed demand.

"Natural gas prices have fallen a lot as short-term fundamentals have softened," said Edmund Siau, chief analyst for natural gas and liquefied natural gas at FGE, a consultancy. Demand disruption and fuel switching have eased the pressure on gas prices in Europe, but competition from Asia is looming. Traders want to know what is Asia's plan to restock before the winter. "

However, Russia's gas shipments to Europe via Ukraine are expected to fall short of capacity on Tuesday because of a drop in supply orders before Easter. Gazprom PJSC has said its shipments meet customer requirements.

Although gas shipments from Russia's Sokhranovka to Ukraine are relatively stable, shipments from Sudzha to Ukraine have fallen sharply in recent days. Grid data show that natural gas flow through Beixi remains stable.