European gas prices have risen by more than 30% on Tuesday, adding to mounting concerns about the cost of heating a home, as supplies that usually come into Europe from Siberia continued to flow eastwards for the 15th day in a row.
The Kremlin has repeatedly denied using Russia’s vast gas resources to turn the screw on Europe, after gas coming through the Yamal-Europe pipeline reversed direction three days before Christmas.
Data from the Mallnow metering point on the German-Polish border on Tuesday showed that the eastwards flow of gas has increased, with volumes hitting almost 9.9m kilowatt hours an hour (kWh/h), up from 5.8m previously.
Eastbound volumes via the Yamal-Europe pipeline hit almost 9.9m kWh/h at the Mallnow metering point on the German-Polish border on Tuesday morning, the data showed, up from 5.8m previously.
The Russian president, Vladimir Putin, said last month that Germany was reselling Russian gas to Poland and Ukraine rather than relieving price pressure, blaming German gas importers for the reversal of flows and soaring prices. The German government has declined to comment on Putin’s remarks.
The benchmark Dutch front-month gas contract was up 32% at €95.20 (£79.40) a megawatt hour (MWh) by mid-afternoon on Tuesday, with the day-ahead contract up €29 at €95.50 MWh.
The UK’s wholesale natural gas benchmark, the National Balancing Point, was up 38% at 236p a therm.
Europe has been at the heart of an energy crisis since last year, when the lifting of Covid-19 restrictions put huge demands on depleted stocks of natural gas.
Benchmark prices have more than quintupled since January 2021, squeezing consumers and companies and threatening the region’s economic recovery.
In the UK, energy suppliers have warned that average gas bills could rise to more than £2,000 a year in April, when a cap on prices is revised upwards, piling pressure on the government to act to bring prices down amid a broader cost of living crisis.
Expectations for colder weather in Europe were contributing to upward pressure on prices, but the low Russian gas flows were the main driver, a trader said.
Separately, the Opec+ cartel of oil-producing nations resolved to press ahead with plans to increase output, signalling their optimism that the Omicron variant of Covid-19 will have only a short-term impact on global growth.
The 23-member alliance, led by Opec member Saudi Arabia and non-member Russia, stuck to a plan for a modest output increase of 400,000 barrels a day in February.
The increase is part of a gradual unwinding of the 10m barrel-a-day production cuts made in 2020 as travel and transport slowed dramatically.
Brent crude rose 50% last year as the global economy began to recover from the depths of 2020 and has rallied so far in the early days of 2022, trading 2% up above $80 (£59) on Tuesday.
The US had urged Opec and its allies, led by Russia, to increase output to help keep a lid on prices in order not to dampen the nascent demand for fuel and slow that recovery.
While the oil-producing nations opted for a slower increase than the US has called for, any rise in the volume of crude they pump indicates confidence that Omicron is not causing demand for fuel to plummet.
In a technical report, Opec said the variant would be “mild and short-lived” and was upbeat about economic prospects.
“This is in addition to a steady economic outlook in both the advanced and emerging economies,” the joint technical committee report said.
