Bloomberg: Gas Price Swings Signal Ukraine Supply Threat

European natural gas traders are preparing for increased market risk from fuel disruptions this winter as Russia’s decision to shut off Ukrainian supplies has already led a Kiev utility to cut hot water to its customers.

The CHART OF THE DAY shows 60-day historical volatility, a measure of price swings, for U.K. next-day gas climbed to 46 percent yesterday, the highest since June last year, according to broker data compiled by Bloomberg. Volatility is climbing as gas pumped into storage in Ukraine, the transit country for about half of Russian flows to Europe, declined for a second week as of Aug. 1, Gas Infrastructure Europe data showed.

European and U.S. sanctions against Russia over its support of separatist rebels in Ukraine may make it harder to resolve the price dispute that led Russian gas exporter OAO Gazprom to cut supplies to NAK Naftogaz Ukrainy in June. While gas flows to Europe haven’t been affected yet, similar disputes between the two former Soviet nations disrupted supplies in 2006 and 2009.
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