Oil and Gas Prices on the Rise

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Oil prices rallied on Thursday as fears of a supply crunch took hold, while natural gas jumped after news of supply disruptions from Russia.

Around 15:50 GMT (17:50 in Paris), the barrel of Brent North Sea for delivery in July graphed 0.17% to 107.69 dollars. A barrel of U.S. West Texas Intermediate (WTI) for June delivery was up 0.68% at $106.43.

“The back-and-forth in the oil market continues,” commented Carsten Fritsch, analyst for Commerzbank. “Oil prices lack clear direction”.

Oil prices had rebounded sharply on Wednesday after several sessions of losses, galvanized by fears of supply disruptions, before faltering earlier in the session on Thursday.

“What is the ultimate driving force? Fear of a recession or a supply shortage?” asks Tamas Varga, analyst at PVM Energy.

Recent disruptions to Russian gas deliveries have boosted prices, but have also reignited fears that Russian oil deliveries will be restricted in an already tight oil market.

Europe must cut off Russia’s “energy oxygen” and end its dependence on Russian gas for good, Ukrainian Foreign Minister Dmytro Kouleba demanded Thursday during a visit to Berlin.

Ukraine has been saying for two days that it can no longer guarantee deliveries via Sokhranivka in the Lugansk region due to the presence of Russian armed forces.

“The shutdown of (supply through) Sokhranivka marks the first time that gas deliveries to Europe have been interrupted due to the war,” says Ole R. Hvalbye, an analyst at Seb.

“This situation is not synonymous with a crisis, but it is a warning signal for the future,” he continues.
On Thursday, Russian gas giant Gazprom announced that it would stop using a key pipeline for the transit of gas to Europe via Poland, in retaliation for Western sanctions imposed on Russia.

“Moscow has fired a second salvo of gas disruptions at Europe, causing further uncertainty and a spike in prices,” believes Kaushal Ramesh of Rystad Energy.

This will accelerate “Europe’s efforts to procure additional natural gas” and “possibly consider demand-side measures such as gas rationing,” the analyst said.

The European natural gas market benchmark, the Dutch TTF, gained nearly 10%, moving to 103.00 euros per megawatt hour (MWh) after touching 115.00 euros per MWh.

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