EUROPE GAS-European gas prices rise as Putin suggests supply cut

LONDON, March 5 - Benchmark Dutch and British wholesale gas prices rebounded on Thursday morning after a drop in the previous session, after President Vladimir Putin warned Russia could halt its remaining gas flows to Europe, adding to concerns about supply after Qatar announced force majeure on LNG shipments.

The Dutch front-month contract at the TTF hub, the benchmark price for Europe TFMBMc1, rose by 2% to 49.0 euros per megawatt hour by 0928 GMT, having risen by 8.3% at 52.80 euros/MWh earlier in the session.

The British April contract NGLNMJ6, which rose 7.2% earlier in the session, was trading 2.1% higher at 129.5 pence per therm, ICE data showed.

Asked by a Russian state television's top Kremlin correspondent Pavel Zarubin about European plans to impose a total ban on Russian pipeline gas imports by late 2027 and to ban new short-term Russian LNG contracts from late April 2026, Putin said it might be more beneficial for Russia to stop selling the gas right now.

Putin said, according to a transcript released by the Kremlin, that with other markets opening up "perhaps it would be more profitable for us to stop supplying the European market right now."

Russia used to supply about 40% of the EU's pipeline gas. Last year, it supplied just 6%, according to EU Commission data.

"Putin’s threat puts a sizeable amount of supply at risk...LNG flows are the key risk. In more normal times, it would be more manageable with the global LNG market to see an adjustment in trade flows over time. However, with 110 bcm per year of (LNG from the) Gulf impacted currently, this would be a challenge for Europe," analysts at ING said in a morning note.

"The tightness in the global LNG market amid Middle East developments means Asian buyers are looking for alternative supply," ING analysts said.

Europe's task of refilling gas storage for next winter has become more expensive, as the fall-out from the U.S.-Israel war on Iran disrupts LNG production and shipments, tightening supply and sending prices soaring.

Buyers in Europe need to find the equivalent of around 700 cargoes of LNG, or 67 billion cubic metres (bcm), to fill storage this summer, according to analysts at Kpler, which is about 180 cargoes, or 17 bcm, more than last year.

The United States, the world's largest LNG producer, has little spare capacity to quickly lift LNG output and offset lost supply, according to Reuters calculations and industry analysts, as plants are already running near full capacity, and most cargoes are tied up in long‑term contracts.

In the European carbon market, the benchmark contract CFI2Zc1 was up 2.02 euros at 72.59 euros a metric ton.