Gas Prices Drop as NATO Nations Urge Caution: Energy Latest

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(Bloomberg) — Energy prices eased on Wednesday as European leaders and the US played down the importance of a rocket strike on a Polish village.

But traders remain on alert to any sign of escalation of the war in Ukraine — and also to the risks to European energy infrastructure. A key oil pipeline to Europe, known as the Druzhba, was shut down on Tuesday after its power source was knocked out by a strike on Ukrainian territory. Hungary says the pipe should come back online “soon.”

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For gas markets, mild weather, full storage levels and new details emerging on the EU’s proposed gas price cap are keeping a lid on prices.

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Key Developments:

(All times are UK.)

European Gas Prices Drop (7am)

Gas prices fell as brimming gas storage facilities and reduced demand keep prices in check. Futures fell for the first time in three days.

The EU set out its proposals for a cap on prices ahead of a meeting of energy ministers next week. The ceiling would be activated if the TTF-Price basis reaches a pre-defined level and orders above that wouldn’t be executed, accoridng ot a document sahred with member states on Tuesday.

NATO Nations Urge Caution After Attack (6 am)

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US President Joe Biden and key European leaders urged caution after a rocket struck a Polish village just over the border from Ukraine. Biden said the trajectory of the missile means it may not have come from Russia.

Tensions are already particularly high after Moscow fired a missile barrage at Ukrainian infrastructure, causing energy outages across the country.

Druzhna Oil Pipeline Halted (8:30 p.m.)

A key pipeline bringing Russian oil to eastern Europe was halted on Tuesday after its power supply was knocked out, according to Hungarian energy company MOL.

MOL said a power station serving the pipeline in Ukraine was hit by Russian artillery, citing the Ukrainian pipeline manager. It’s not clear how long the pipeline will be out of action.