LONDON (Reuters) -British and Dutch gas prices plummeted on Friday amid profit taking after sharp gains the previous day on the Russian invasion of Ukraine and expectations west-bound gas flows via the Yamal-Europe pipeline could resume.
The drop in prices also came following a lack of sanctions on Russia's energy sector, after European Union envoys agreed to freeze European assets of Russian President Vladimir Putin and Foreign Minister Sergey Lavrov.
In the Dutch gas market, the front-month contract fell by 45.90 euros, or 33.8%, to 90.10 euros per megawatt hour (MWh) by 1700 GMT, having risen to an intraday high of around 140 euros/MWh on Thursday.
The price for April was down 26.40 euros, or 22.8%, at 89.60 euros/MWh, while the winter 2022 contract was down 29.43 euros, or 37%, at 88.60 euros/MWh.
In the UK gas market, the March price fell by 96.42 pence, almost 30%, to 225.55 pence/therm, while the summer 2022 price slumped by 31.82 pence to 225.00 p/therm.
Traders said there was a correction in early trade which was later accentuated by auction results which showed the portion of the Yamal-Europe pipeline from Poland to Germany, which has been supplying gas in reverse mode since late December, could resume in the normal westward way later today.
East-bound gas supplies from Germany to Poland via the Yamal - Europe pipeline stopped on Friday, while preliminary bids have emerged for gas flows to the west, data from the Gascade pipeline operator showed.
However, physical flows had yet to flow west through the pipeline by 1700 GMT.
According to Poland's Gaz-System, which operates the Polish section of the pipeline, gas capacity of 6.4 million kilowatt-hour per hour has been allocated for Gazprom (MCX:GAZP) for transit via the Kondratki transit point from 1500 local time (1400 GMT) on Friday until Saturday morning.
Russian supply to Europe has also increased since yesterday via the Ukrainian route (Velky Kapusany entry point), Refinitiv Eikon data showed.
Refinitiv analysts said the recent price spike had made it cheaper to take Russian pipeline gas than buy gas on the spot market.
Russia's Gazprom said it was supplying gas via Ukraine in line with demand from European consumers. Demand from European consumers stood at 103.8 million cubic metres on Friday.
European Union carbon prices rose, with the benchmark December 2022 contract up 0.74 euros at 87.77 euros a tonne.