European natural gas futures rose, with traders focused on supplies from Russia and the continent’s imports of liquefied fuel.

The European Union on Monday said that companies can keep importing Russian gas without breaching sanctions, easing concerns that shipments from the bloc’s biggest provider might be cut amid a payment dispute. 

But the market is grappling with the implications of the region’s increased reliance on LNG imports as buyers seek non-Russian supplies after the country’s invasion of Ukraine. 

The “EU gas market infrastructure was not built for receiving such large LNG inflows, and regional stresses are already manifesting themselves through record dispersions on local gas benchmarks,” Biraj Borkhataria, associate director of European research at RBC Capital Markets, said in a note. 

The UK is facing greater gas-storage limitations, stoking concerns that its LNG arrivals may be curbed in an effort to avoid over-stretching its infrastructure, which has buoyed National Balancing Point hub prices. 

EU Guidelines

The European Commission last week sent its revised guidelines to member states, noting that companies should make a clear statement that they consider their obligations fulfilled once they pay in euros or dollars, a spokesman said Monday. The announcement has helped to ease a weeks-long standoff between the bloc and Russia over energy supplies. 

Gas injections at storage facilities across Europe are returning to near-normal levels, which has steadied prices somewhat. 

“One of the reasons European storage has filled so quickly is that Asian LNG demand has been relatively weak in recent months,” RBC said in its note. 

Still, natural gas shipments to Europe via Ukraine were set to remain curbed on Tuesday. Flows via the Nord Stream pipeline to Germany, the biggest link delivering Russian gas to the EU, were expected to remain stable, near full capacity. 

Benchmark front-month futures rose as much as 5% to 97.50 euros per megawatt-hour after earlier dropping to the lowest level since April 19. The UK equivalent rose as much as 13% to 195 pence a therm.