(Bloomberg) -- European natural gas jumped as nervousness over a short-lived rebellion in Russia added to supply fears in an already volatile market.
Benchmark futures rose as much as 13% on Monday. Gas has soared more than 30% this month with prolonged production outages in Norway countering sluggish demand. Price fluctuations have surged in June, and the dramatic mutiny in Russia over the weekend is only likely to roil markets further.
“Russian geopolitical risk now is significantly higher than before the weekend,” said Tom Marzec-Manser, head of gas analytics at ICIS in London. “The uncertainty of what could happen in the coming weeks within Russia itself, rather than within Ukraine,” is pushing gas higher.
While Europe has significantly reduced its dependence on Russian pipeline gas, Moscow remains a major supplier of liquefied natural gas. The continent also gets a large amount of LNG from other countries like the US, and the fuel overall has been crucial in ensuring supply during the energy crisis.
Other factors are also adding to the market pressures. Shipments from Norway remain capped with a number of facilities undergoing maintenance. Seasonal work continues at major projects, including the Nyhamna processing plant and the Troll field.
In Russia, there were signs that the situation was calming. Authorities in Moscow lifted a so-called counter-terror regime that was put in place Saturday as the Wagner group mutiny started. The Moscow Exchange is due to operate normally. Oil in London was relatively steady with a 0.7% advance, while wheat in Chicago rose 1.7%. US and European equity futures ticked higher.
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“Overall, just like the other Russia-focused commodities, the impact for now is limited,” said Ole Sloth Hansen, head of commodities strategy at Saxo Bank A/S.
Dutch front-month gas, the European benchmark, was 13% higher at €36.80 a megawatt-hour at 9:25 a.m. in Amsterdam. The UK equivalent contract also rose 13%.
--With assistance from Stephen Stapczynski.
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