“Gas prices in Europe and oil fall amid Trump’s peace plan between Ukraine and RussiaEuropean natural gas futures hit an 18-month low, and oil prices fell by more than 1%. This happened amid easing weather forecasts and discussions of a peace agreement between Ukraine and Russia proposed by the US.
”, — write: unn.ua
Gas futures in Europe reached a minimum since 2024European natural gas futures, according to Bloomberg, reached an 18-month low amid easing short-term weather forecasts and traders’ assessment of the prospects for a peace agreement on Ukraine.
Benchmark futures fell to a minimum since May 2024, as forecasts of higher temperatures signaled weakening heating demand. Continued large-volume gas supplies and new talks about diplomatic negotiations on Ukraine have moved the market out of several narrow trading ranges.
On Thursday, Ukraine announced its agreement to review a plan “developed with the mediation of Washington and Moscow.” Traders are closely monitoring developments, as a peace agreement with Russia, although highly uncertain at this point, could ease sanctions against the country, the publication writes.
The former leading gas supplier to the EU now covers only about 10% of the bloc’s fuel imports, however, as noted, additional energy exports from Russia to the global market, including oil, could put pressure on prices.
“The end of the war could mean that the ban on Russian gas supplies via pipelines to the EU will not happen, which will lead to better supply for Europe than previously expected,” said Tom Marzec-Manser, head of gas and LNG in Europe at Wood Mackenzie.
Traders are increasingly convinced that large global LNG supplies will allow Europe to get through the winter, despite its reserves being below historical norms. However, the market remains volatile during the heating season, and any significant change in demand or supply could lead to sharp price movements, the publication notes.
Recent meteorological models indicate milder weather in the coming days in northwestern and central Europe – a relief for the market after the current cold spell increased gas demand and accelerated gas withdrawal from storage. According to Vaisala meteorologist Matthew Dross, early December “continues to be warmer compared to previous forecasts.”
At 9:22 AM in Amsterdam, front-month gas futures in Europe fell by 2.6% to 30.36 euros per megawatt-hour.
Oil extended its decline to 1%Oil prices fell more than 1% on Friday, extending their decline for a third trading session as the US pushed for a peace deal between Russia and Ukraine that could increase global supply, while uncertainty over interest rates curbed investors’ risk appetite, Reuters notes.
Brent crude futures fell 83 cents, or 1.3%, to $62.55 a barrel at 08:45 GMT (10:45 Kyiv time). US West Texas Intermediate crude futures fell 1.6%, or 92 cents, to $58.08.
Both contracts are expected to fall by approximately 3% for the week, negating last week’s gains.
Market sentiment turned bearish as Washington pushed for a peace plan between Ukraine and Russia to end the three-year war, and sanctions against Russian oil producers Rosneft and Lukoil were set to take effect on Friday.
“With news of talks coming just as US sanctions on Russia’s two largest oil companies are due to take effect today, oil markets have somewhat softened the risks associated with Russian oil supplies,” said Jim Reid, managing director at Deutsche Bank.
However, a peace deal may still be far off, the publication notes.
“A deal is far from guaranteed,” ANZ analysts said in a client note, adding that Ukraine has repeatedly rejected Russia’s demands as unacceptable.
“The market is also skeptical about the effectiveness of the latest restrictions imposed on Russian oil companies Rosneft and Lukoil,” the analysts noted.
Lukoil must sell its huge portfolio of overseas shares by December 13, the publication writes.
A strengthening dollar also negatively impacted oil prices, and the currency is poised for its best week in over a month, as investors expect the US Federal Reserve is unlikely to cut interest rates next month.
OANDA analyst Kelvin Wong said the CME FedWatch tool shows the probability of a rate cut in December has significantly decreased to 35% compared to approximately 90% a month earlier.
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