Gas falls in Europe as Slovakia says it has ‘solution’ for transit through Ukraine – Bloomberg

European natural gas has fallen in price as Slovakia’s desire to continue supplying fuel through Ukraine adds to optimism about supplies to the region next year, Bloomberg reports, UNN writes.

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Benchmark futures retreated after jumping 4.4% on Tuesday, the biggest daily gain in a month.

Slovakia, a key buyer of Russian gas shipped through Ukraine, has held a series of talks with Moscow and Kyiv, and Prime Minister Robert Fico plans to discuss “elegant alternative technical solutions” with European Commission President Ursula von der Leyen on Thursday.

“We have a solution so that Ukraine does not transit Russian gas, but instead it would be gas that belongs to someone else,” he said, without going into details.

Slovak PM Fico to meet with European Commission President on gas transit through UkraineDec 18 2024, 10:57 AM • 12266 views

The newspaper notes that there is little time left to avoid a halt in pipeline supplies through Ukraine before the transit agreement with Russia expires at the end of the year. While Europe has generally reduced its dependence on Moscow – and Brussels has said it is not interested in continuing Russian flows – buyers in the eastern part of the bloc are increasing pressure to reach an agreement, the newspaper writes.

Several options for maintaining transit have reportedly been proposed, including the use of intermediaries. Earlier this year, the Azerbaijani company Socar was mentioned as a potential intermediary.

For now, “this remains speculative, as are any deals that arise,” analysts at Inspired Plc said in a note.

Europe’s gas reserves are depleting faster than usual this winter, which contributed to the rise in prices in early December. With gas transit through Ukraine halted next month, the decline could be even more rapid, with Goldman Sachs Group Inc. seeing the risk of storage levels falling to 39% by the end of the heating season – well below the 53% mark this year.

The continent will still be able to replenish stocks next summer, “but it will require a lot of things to go right,” Goldman Sachs analyst Samantha Dart wrote in a note. That includes no additional delays in future export projects and relatively “moderate” growth in Asian LNG demand.

Mild weather is forecast in northwestern Europe until early January, and traders are winding down positions before the holiday season. Together with higher wind generation and weak demand for LNG from China, this is helping to keep prices down for now, the publication writes.

Dutch futures for the next month, the European gas benchmark, fell 3% to 40.65 euros per megawatt hour by 12:17 p.m. local time in Amsterdam.