The fall in European gas is due to buyers signaling that Russian flows will continue

Natural gas prices in Europe have fallen as some major buyers on the continent say they expect to continue buying Russian gas despite mixed signals from Brussels on whether they will violate the ruble payment ban.

Benchmark futures fell as much as 2.3%. The European Union has issued two guidelines on the issue, both leaving room for explanation when a European Commission spokesman said on Tuesday that opening an account in rubles to pay for Russian supplies would go beyond the EU’s recommendation.

For now, some companies, including Italy’s Annie SPA and Germany’s Uniper SE, have said they expect to continue buying from Russia. The bill is coming up later this month.

“There seems to be no clarity as to whether this payment process violates the sanctions, only increasingly supplied and still some gray areas to be ironed out,” said Kaushal Ramesh, a gas and LNG analyst at Reasted Energy.

Russian gas shipments to Europe have come under scrutiny after troops stopped by a Ukrainian cross-border entry point following ground operations. Transit through Ukraine is expected to increase on Wednesday, but still less than normal. The supply through the Nord Stream pipeline, the largest connection between Russia and Europe, remains stable.

By 8:37 a.m. in Amsterdam, the front-month gas futures were down 0.7% at 93.50 euros per megawatt-hour. Carbon permits have fallen by 6.9% since the EU sold 20 billion euros ($ 21 billion) in permits to help finance plans to free itself from Russian gas.

© 2022 Bloomberg

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