Bloomberg: U.K. Gas Falls to Three-Year Low as Stocks Offset Ukraine

U.K. natural gas fell to the lowest level since November 2010 as an agreement for supplies to Ukraine diminished the risk of cuts in Russian flows amid above-average inventories in Europe.

The front-month contract declined as much as 2.7 percent on the ICE Futures Europe exchange in London. Ukraine, which transits about 15 percent of Europe’s gas demand from Russia, yesterday signed an accord to start supplies from Slovakia from September, which follows a deal earlier this month to import fuel from RWE AG, Germany’s second-biggest utility, via Poland.

“The inherent risk premium associated with Ukrainian disruptions is diminishing, with the reverse flow agreement with Slovakia and RWE flowing gas to Ukraine via Poland,” Tobias Davis, a broker at GFI Securities Ltd. in London, said. “People are pulling out of the third quarter and the winter contract and that’s bringing everything else down.”
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