After several days of downward movement bringing us back to levels not seen in 6 weeks, yesterday saw a buck in the trend and gains of 4% were seen in the European and UK gas markets. What started off as rangebound movement due to technical levels being hit soon turned into strong gains in the afternoon after various reports regarding the Ukraine transit deal were published. Several parties supporting Slovakia in a request a continuation of the transit deal followed with the EU confirming it has no interest in the continuation of Russian gas transit via Ukraine. Time is running out to avoid an interruption of supplies and buyers are now stepping up pressure on the EU to get behind a solution. Despite recent easing in prices the market remains nervous, especially those landlocked countries which still rely on Russian gas. If the transit gas was to end this could drive up prices (albeit fundamentals are looking stable so should cap the gains) and increase competition at a time when storage levels are unusually low for this time of year. It certainly will be an interesting end to the year with as ever volatility continuing.
