Bloomberg: Traders Delaying Russian Gas Imports Tap Declining EU Stores

Europe is accelerating withdrawals from natural gas inventories as traders delay imports of Russian fuel poised to fall with oil.

The amount of gas taken from storage sites in the 28-nation European Union rose 44 percent from a year earlier since the heating season started Oct. 1, Gas Infrastructure Europe data showed. Russian flows to most of Europe and Turkey slid 29 percent last month from a year earlier after falling by a quarter in November, according to OAO Gazprom in Moscow.

Russian gas supplies, usually tied to oil prices with a six- to nine-month lag, will be cheaper in the summer as crude’s 58 percent decline since June filters into long-term contracts. The collapse in oil is a “huge incentive” for traders to buy as little Russian gas as possible now in favor of future deliveries, Citigroup Inc. said in a Jan. 20 report.

“It only makes sense to defer receipt of Russian gas, or any gas indexed to oil prices with a time lag,” Zach Allen, president of consultants Pan Eurasian Enterprises Inc. in Raleigh, North Carolina, said by e-mail Jan. 21. “If we see a turn up in oil futures, that market behavior will change.”

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