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Oct. 8, 2021, 9:51 a.m. EDT

Natural gas prices try to find their footing in Europe after Russian respite

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By Barbara Kollmeyer

Natural gas prices were bouncing around in Europe again on Friday, but attempted to steady after from a promise by Russian President Vladimir Putin to boost supplies to the continent.

Meanwhile, in the equities market European stocks stuck to the flat line, though energy stocks rose as shortages undermine the economic recovery from the pandemic.

European natural gas futures — based on benchmark November Title Transfer Facility (TTF)  futures in the Netherlands — rose as much as 10% earlier in the day, but were last down 4% to 92.50 euros per megawatt hour (MWh) from 96 euros on Thursday. Prices jumped more than 30% earlier this week, then dramatically swung lower after Putin’s offer to supply gas to Europe well above its contractual commitments.

U.K. natural gas futures  also climbed around 9% earlier, but swung around to drop 4% to 243 pence a therm. The contract had jumped as much as 38% earlier in the week before dropping sharply on Putin’s comments.

“Natural gas prices in American and Germany have soared by 126% and 459% so far this year (see Exhibit 2) while the Dutch gas price was up 748% as of yesterday’s peak before Putin triggered a 37% decline,” said Christopher Wood, global head of equity strategy at Jefferies, in his weekly GREED & fear note to investors.

“Russia will clearly want to see progress on the new Nord Stream 2 pipeline if it is to supply gas to Europe significantly beyond its contractual commitments,” he said.

Natural gas futures will probably remain elevated for the next 18 months, even with extra Russian gas, Tom Marzec-Manser, global gas and LNG analyst at ICIS, told MarketWatch in a phone interview.

“We still have a storage deficit…that is lower than it needs to be so we can get more gas now, but it doens’t help us actually immediately backfill the volumes that we should have injected into storage over the last six months or so,” he said.

Russia has been accused by withholding on gas supplies as it awaits approval of the controversial Nord Stream 2 pipeline. Europe and U.K. natural gas prices have been rising for weeks as winter approaches, following a colder spring, outages of some gas fields and rising Asian demand.

The biggest gaining sector in European equities was energy, as U.S. /zigman2/quotes/209723049/delayed CL00 +1.46% and Brent crude futures prices rose more than 1% each. Oil rose Thursday after the Energy Department reportedly said it has no plans to release crude from its Strategic Petroleum Reserve.

Shares of BP /zigman2/quotes/207305210/composite BP +0.85% /zigman2/quotes/202286639/delayed UK:BP +3.16% and Royal Dutch Shell /zigman2/quotes/205095589/composite RDS.A +0.90% /zigman2/quotes/206428183/delayed UK:RDSA +2.48% gained more than 2% each.

The Stoxx Europe 600 index /zigman2/quotes/210599654/delayed XX:SXXP +0.69% , meanwhile, slipped 0.1% to 458.04, holding to moderate losses as U.S. jobs data came in weaker than expected. The German DAX /zigman2/quotes/210597999/delayed DX:DAX +0.16% and French CAC 40 /zigman2/quotes/210597958/delayed FR:PX1 +0.54% were also modestly lower, while the FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX +0.94% was up 0.3%.

Bond yields were also on the rise, with that of the 10-year German bund /zigman2/quotes/211347112/realtime BX:TMBMKDE-10Y +5.56% up 2 basis points to -0.159. The yield on the 10-year Treasury /zigman2/quotes/211347051/realtime BX:TMUBMUSD10Y +1.08% was up 2 basis points to 1.590%. U.S>

In the wake of rising yields, which can be a negative for fast-growing companies, technology was the worst performing sector in Europe. Shares of chip group STMicroelectronics /zigman2/quotes/207734906/composite STM +3.39% /zigman2/quotes/203551318/delayed IT:STM +2.59% were down 1%, along with chip equipment maker ASML Holding /zigman2/quotes/210293876/composite ASML +4.22% /zigman2/quotes/206208657/delayed NL:ASML +2.80% , off 1%,

The downside in Europe was led by Zur Rose Group /zigman2/quotes/205626361/delayed CH:ROSE -2.73% , which slumped 6% after Berenberg analysts cut the e-pharmacy company to hold, saying its long-term growth outlook was priced into the 75% jump in shares seen this year.

“We leave our estimates unchanged, but we think there is the potential for headwinds from a delay to the mandatory introduction of eRx in Germany, which could affect Zur Rose’s near-term earnings and cash position,” said a team of analysts led by Gerhard Orgonas.

/zigman2/quotes/209723049/delayed
US : U.S.: Nymex
$ 70.97
+1.02 +1.46%
Volume: 8,580
Nov. 29, 2021 7:10p
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/zigman2/quotes/207305210/composite
US : U.S.: NYSE
$ 26.18
+0.22 +0.85%
Volume: 10.10M
Nov. 29, 2021 4:00p
P/E Ratio
13.53
Dividend Yield
4.83%
Market Cap
$83.38 billion
Rev. per Employee
$2.84M
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/zigman2/quotes/202286639/delayed
UK : U.K.: London
327.70 p
+10.05 +3.16%
Volume: 60.62M
Nov. 29, 2021 4:35p
P/E Ratio
13.99
Dividend Yield
5.00%
Market Cap
£62.52 billion
Rev. per Employee
£2.21M
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/zigman2/quotes/205095589/composite
US : U.S.: NYSE
$ 42.45
+0.38 +0.90%
Volume: 4.65M
Nov. 29, 2021 4:00p
P/E Ratio
36.16
Dividend Yield
2.99%
Market Cap
$159.82 billion
Rev. per Employee
$1.95M
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/zigman2/quotes/206428183/delayed
UK : U.K.: London
£ 1,594.80
+38.60 +2.48%
Volume: 9.26M
Nov. 29, 2021 4:35p
P/E Ratio
39.42
Dividend Yield
0.04%
Market Cap
£119.84 billion
Rev. per Employee
£1.52M
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/zigman2/quotes/210599654/delayed
XX : STOXX
467.24
+3.19 +0.69%
Volume: 0.00
Nov. 29, 2021 11:03p
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/zigman2/quotes/210597999/delayed
DAX
DX : Xetra Indices
15,280.86
+23.82 +0.16%
Volume: 95,659
Nov. 29, 2021 6:30p
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/zigman2/quotes/210597958/delayed
FR : France: Euronext Paris
6,776.25
+36.52 +0.54%
Volume: 108,062
Nov. 29, 2021 6:05p
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/zigman2/quotes/210598409/delayed
UK : FTSE UK
7,109.95
+65.92 +0.94%
Volume: 828,565
Nov. 29, 2021 4:59p
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/zigman2/quotes/211347112/realtime
add Add to watchlist BX:TMBMKDE-10Y
BX : Tullett Prebon
-0.32
+0.02 +5.56%
Volume: 0.00
Nov. 29, 2021 6:03p
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/zigman2/quotes/211347051/realtime
add Add to watchlist BX:TMUBMUSD10Y
BX : Tullett Prebon
1.52
+0.02 +1.08%
Volume: 0.00
Nov. 29, 2021 7:20p
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/zigman2/quotes/207734906/composite
US : U.S.: NYSE
$ 49.16
+1.61 +3.39%
Volume: 2.92M
Nov. 29, 2021 4:00p
P/E Ratio
24.89
Dividend Yield
0.35%
Market Cap
$43.07 billion
Rev. per Employee
$222,075
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/zigman2/quotes/203551318/delayed
IT : Italy: Milan
43.00
+1.09 +2.59%
Volume: 2.91M
Nov. 29, 2021 5:35p
P/E Ratio
26.00
Dividend Yield
0.49%
Market Cap
€38.06 billion
Rev. per Employee
€194,807
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/zigman2/quotes/210293876/composite
US : U.S.: Nasdaq
$ 815.01
+32.99 +4.22%
Volume: 1.41M
Nov. 29, 2021 4:00p
P/E Ratio
51.70
Dividend Yield
0.41%
Market Cap
$318.34 billion
Rev. per Employee
$567,632
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/zigman2/quotes/206208657/delayed
NL : Netherlands: Euronext Amsterdam
704.80
+19.20 +2.80%
Volume: 1.02M
Nov. 29, 2021 5:37p
P/E Ratio
53.36
Dividend Yield
0.48%
Market Cap
€281.33 billion
Rev. per Employee
€497,934
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/zigman2/quotes/205626361/delayed
CH : Switzerland: SWX
CHF 356.00
-10.00 -2.73%
Volume: 56,534
Nov. 29, 2021 5:31p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
CHF3.51 billion
Rev. per Employee
CHF753,536
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