The cost of wholesale European natural gas plunged after Russian shipments via a key route crossing Ukraine rebounded. That may be enough to help ease the pressures on Irish household bills from rising sharply again in the coming weeks.

Prices slumped as much as 12% as deliveries into Slovakia through the Velke Kapusany entry point returned to normal, grid data showed. Higher Russian supply is weighing on prices just as mild weather curbs demand and wind output surges in Germany and Britain, taking pressure off gas-fired plants.

“A significant increase in Russian flows, warmer weather and good wind generation are all driving prices downwards,” Gazprom Energy, a unit of the Russian gas giant supplying UK businesses, said in a daily market note.

European gas futures fell as low as €74.24 a megawatt-hour. The equivalent UK contract sank 11%.

Geopolitical tensions still running high 

Russian flows via Poland into Germany remain suspended, and geopolitical tensions over Ukraine are still running high.

Diplomatic efforts to ease the crisis continue. Russian President Vladimir Putin has talked with his French counterpart Emmanuel Macron and Hungarian leader Viktor Orban.

The huge surge in European gas prices has been one of the main factors that has driven Irish consumer price inflation to 5.5% this winter, the highest for two decades.

The contracts as tracked by the Irish Examiner through the early summer months were also down sharply, but at €71 a megawatt-hour for delivery in June, remains at an historically elevated price.

Shortages of all types of fuel, not just gas, including renewables used to generate power for the all-Ireland power grid, have driven up prices in recent months.

Oil prices add to the pressure

Crude oil prices haven’t helped the situation.

Yesterday, oil edged higher as investors await the move by Opec at its meeting this week. Brent crude traded at around $86.60 a barrel.

Most analysts expect expect Opec+ to maintain its supply increases. Goldman Sachs warned the recent price surge could mean the group may deliver more than expected. Traders are also watching an arctic blast set to hit Texas this week that may freeze oil and natural gas production areas, potentially causing another global supply shock.

Crude’s recent surge has been supported by a tight global market and geopolitical concerns over Ukraine, even though Russia has denied it plans to attack its neighbour. Demand signals and the risk of an escalating Russia-Ukraine crisis are likely to be discussed by the Organisation of Petroleum Exporting Countries and its allies when they convene today.

Meanwhile, Exxon reported that will boost spending on new oil wells and other projects by as much as 45% after posting the biggest profit in almost eight years.

• Bloomberg and the Irish Examiner

Reporting: The Irish Examiner