Europe gas prices fall as Nord Stream restart brings relief

European natural gas prices fell after Russia restarted shipments through the Nord Stream pipeline, its biggest link to Europe, following 10 days of maintenance.Russian gas was flowing to Germany at about 40% of the pipeline’s capacity yesterday morning, roughly the same as before the annual works began. Orders indicate the link will operate at the same level for at least a day.The resumption of flows eases fears that Russia will halt shipments and provides some relief for Europe as it races to store the fuel before the winter. European Union policy makers have been preparing for the worst with a plan to curb gas consumption by 15%. Budget Commissioner Johannes Hahn even said he didn’t expect the pipeline to come back.“The resumption this morning of flows along Nord Stream is likely to lead to a collective sigh of relief from not just the European gas market, but from the wider economy,” said Tom Marzec-Manser, head of gas analytics at ICIS in London. Physical flows arriving in Germany are a bearish indicator for gas, even if the pipeline is operating at only a fraction of its total capacity, he said.Traders have been looking for clarity on plans to restart the pipeline for days. Russian President Vladimir Putin on Tuesday warned that Nord Stream could return from maintenance at lower rates unless a spat over a key piece of equipment is resolved. One of the pipeline’s turbines got stuck in Canada by western sanctions on Russia for its invasion of Ukraine, but has since been released.Putin said delays in receiving the turbine could lead volumes to be cut to only 20% of capacity by the end of this month, when another part is due for maintenance. Flows via the pipeline were reduced to around 40% of capacity on June 16 until the annual works started.Europe needs to stay vigilant despite returning flows via Nord Stream, said Simone Tagliapietra, a senior fellow at Brussels-based think tank Bruegel. For Moscow, keeping flows low may be a better strategy than cutting them off altogether, she said.“It decreases Europe’s resolve to reduce gas demand,” she said. “An interruption is likely to happen in the winter and each cubic metre of gas saved now, makes Europe more resilient in the next months.”In a call with reporters yesterday, Kremlin spokesman Dmitry Peskov rejected accusations that Russia uses gas to pressure or blackmail Europe.Dutch front-month futures, the European benchmark, fell as much as 6.5% to 145 euros a megawatt-hour and traded 5.7% lower in Amsterdam yesterday. The UK equivalent declined as much as 18% to 219 pence a therm. UK day-ahead dropped as much as 50% to 125 pence a therm after an interconnector between the UK and Belgium halted flows because of filter damage.