I guess it will be a cold day in Europe or perhaps another location before a final Greek debt deal can get done. While Europe gets hit with a cold front that is bringing snow and cold and is driving up European natural gas prices to record highs, bond holders of Euro debt seem to be getting a cold shoulder. Oil prices across the global are falling but Brent crude seems to be supported a bit by cold weather and strong Asian demand. Still, despite the deep chills, oil prices are heavy on the increased odds of a Greek default.
What, no deal?! The commodity markets were pricing in a break through at the meeting of the troika yet it appears that Greek Prime Minister Lucas Papademos believes that they are still very far apart. So it looks like we will be buying and selling the Greek hopium index for some time to come.
How cold is it? Well cold enough to cut off supply to Europe. Reuters News reports that, Russian gas exporter Gazprom has brought supplies to Europe back up to normal after reducing them for a few days, but it is unable to meet increased demand amid freezing weather, a company official told Russian Prime Minister Vladimir Putin on Saturday. European countries reported that Gazprom, which is responsible for around a quarter of European Union's natural gas imports, reduced supplies to them due to a biting cold front, while they also requested more fuel for heating. Gazprom has been saying it had not breeched any contractual obligations. But on Saturday its chief financial officer, Andrey Kruglov, told Putin the company had cut gas supplies to Europe by up to 10 percent for a few days before returning them to normal levels. However, the company cannot supply more gas, he said. We see that they are requesting more... But Gazprom at the moment cannot supply the extra volumes our West European partners are asking for, Kruglov told Putin.
Reuters says, the shortfall in supplies was a reminder of the Russian gas supply halts to Europe at the height of winter in 2006 and 2009 due to a spat between Russia and Ukraine, which stands on the gas transit route to the EU, over pricing. Ukraine has been asking Russia again to lower its gas prices, threatening a similar standoff. On Friday a Gazprom official said that Ukraine must be taking more gas than its contracted share. Last year, Gazprom increased its gas supplies to Europe to 150 billion cubic meters (bcm) from around 138.6 bcm in 2010. It is aiming to ramp up those volumes to around 164 bcm this year thanks partly to the underwater Nord Stream pipeline commissioned last November. Nord Stream's initial capacity stands at 27.5 billion cubic meters a year, which may be doubled by the fourth quarter. Russia is also pushing for a South Stream pipeline to rival the EU-backed Nabucco and other supply lines. Moscow plans to ship over 60 bcm of gas to Europe via South Stream starting from 2015.
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