By Vanessa Dezem
European natural gas prices extended declines after Russian President Vladimir Putin said he backed a diplomatic solution to tensions with the U.S. over Ukraine and announced some troops would return to their bases.
Putin said Tuesday that he hoped negotiations would resolve the impasse over Ukraine, following a meeting with German Chancellor Olaf Scholz. The market has held on to every word in the standoff, with Russia’s announcement of pullback of troops this week affecting everything from oil and gas to metals to global equities.
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Still, the West remains wary. U.S. President Joe Biden said it is possible that Russia will invade Ukraine because its troops remain in a “threatening position,” but that diplomacy should continue. Moscow has repeatedly denied it plans to invade its neighboring country.
Meanwhile, the gas market is keeping a close watch on flows of Russian gas into Europe. The country has been limiting supplies for months, but has said it’s sending as much as its customers in the continent are demanding. Putin told Scholz on Tuesday that Moscow remains a reliable supplier of energy. Mild weather and increasing flows of LNG have helped to ease the market’s tightness in recent weeks.
Benchmark European gas prices declined as much as 9.1% to the lowest intraday level since Nov. 10. They were 8.4% lower at 64.99 euros a megawatt-hour as of 8:41 a.m. in Amsterdam, after plunging 12% on Tuesday.
Russian gas entering Slovakia through a key route crossing Ukraine declined again on Wednesday, after a brief recovery. Flows through the Yamal-Europe line have been halted for more than eight weeks.
©2022 Bloomberg L.P.
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