Slovakia's Initiative Brings Hope for European Gas Supply Next Year

There are cautious positive signals in the European energy market: Thanks to Slovakia's diplomatic efforts aimed at maintaining gas supplies through Ukraine, the region shows confidence regarding its gas supply for the coming year. The leading gas futures in Europe eased slightly after a 4.4% increase on Tuesday, the largest daily gain in more than a month. Slovakia, a significant consumer of Russian gas transported through Ukraine, has engaged in intensive discussions with Moscow and Kyiv. Prime Minister Robert Fico plans to discuss technical alternatives to secure gas supplies with the President of the European Commission, Ursula von der Leyen. According to Fico, there are plans where Ukraine would not transport Russian gas, but rather gas owned by third parties. Time is pressing to prevent the cessation of pipeline deliveries through Ukraine, as the current transit contract with Russia expires at the end of the year. While Europe as a whole has reduced its dependency on Moscow and Brussels has expressed no interest in continuing Russian supplies, eastern EU members are pushing for an agreement. Several options to maintain the transit have been discussed, including the use of intermediaries – with Socar from Azerbaijan mentioned as a potential mediator. Europe's gas reserves are depleting faster than usual, contributing to price increases in December. A halt in gas transit could accelerate the decline, and analysts at Goldman Sachs see a risk that storage levels could fall to 39% by the end of the heating season – significantly below this year's level of 53%. While mild weather in Northwestern Europe is forecast until early January and there is weak demand from China, prices remain temporarily stable. The Dutch front-month futures, Europe's gas benchmark, were 0.9% lower at €41.67 per megawatt hour at 9:41 AM in Amsterdam.