European Oil and Gas Prices Drop amid Ukraine Peace Negotiations
European oil and gas prices declined on Monday, with natural gas falling below 30 euros per megawatt hour for the first time since May 2024, as optimism grew surrounding potential peace talks between Ukraine and Russia. At midday, Brent crude from the North Sea, for January delivery, was down 0.38% at $62.32 per barrel. West Texas Intermediate, the American benchmark, also for January delivery, fell 0.40% too $57.83 per barrel.
The price drop in European natural gas is linked to progress in negotiations for a new framework to end the conflict, reportedly drafted by American and Ukrainian officials. Discussions are focusing on “sensitive issues addressed at the level of presidents,” according to sources familiar with the talks. Contributing to the downward pressure on prices is “strong annual growth in LNG imports” (liquefied natural gas), which has “compensated for the loss of Russian volumes transiting through Ukraine,” and “the significant increase in gas supplies to American LNG terminals,” as noted by DNB analysts. Furthermore, forecasts predicting a warmer winter are expected to reduce demand.
The Dutch TTF futures contract, the European benchmark for natural gas, closed down 2.69% at 29.38 euros per megawatt hour (MWh) on Monday, after briefly reaching 29.20 euros – it’s lowest level since May 2024.
