(Bloomberg) -- European natural gas prices extended last week’s drop as negotiations between Russian and Ukrainian officials entered their fourth round on Monday.

Most Read from Bloomberg

Ukraine Update: New Round of Talks; U.S-China Officials to Meet Sea’s Billionaire CEO Opens Up After 75% Stock Crash U.S. Says Russia Sought China Military Aid for Ukraine War Pregnant Woman Pictured Being Evacuated From Bombed Maternity Ward Has Died U.S. Journalist Killed in Ukraine in Shooting Near Kyiv

Any indication of headway in negotiations toward a possible ceasefire would give the gas market a breather after record prices and high volatility in the past few weeks. The war has roiled commodity markets from gas to grains, with the sanctions aimed at isolating Moscow putting traders on edge.

“Any progress in peace talks will likely see more risk premium fall out of gas pricing,” consultant Inspired Energy Plc said in a report on Monday.

Benchmark Dutch front-month gas fell as much as 16%, while power prices in northwest Europe also plunged by more than 10%. Gas flows from top supplier Russia were at normal levels both via Ukraine and on other routes, just as demand may also ease because of milder weather arriving.

Ukraine Update: U.S., China Officials Meet as Putin Pushes On

Negotiations between Russian and Ukrainian officials resumed on Monday, with Ukraine’s main negotiator saying the two sides were working on a potential cease-fire though the discussion was “hard.” Delegations have made some progress in negotiations, according to Leonid Slutsky, a senior Russian lawmaker and one of his country’s negotiators, the Interfax news agency reported. Still, the Kremlin said Russia would realize all its plans in its Ukraine operation.

The region’s gas traders are focusing on every step in the negotiations as there’s still a real risk that flows could be cut. Even though the European Union plans to curb imports from Russia by two-thirds this year, the fuel is badly needed to top up reservoirs at near record lows.



German Finance Minister Christian Lindner said he remains opposed to any initiatives to hit oil and gas supplies, the Tagesspiegel newspaper reported on Sunday.

Weather forecasts are also pointing to milder than average temperatures in northwest Europe in the coming week. More vessels with liquefied natural gas arriving at European ports will also boost supplies.

“The milder weather comes as welcome news to the gas market,” said Michael Yip, an LNG analyst at BloombergNEF, in a report on Monday.

That has “eased pressure on European gas storage levels,” which have inched back into the five-year average range since late-February, he said. European reservoirs are currently 26% full.

Low Risk to Weather-Related LNG Demand in Asia and Europe: BNEF

Next-month gas futures dropped 9.8% to 118.41 euros per megawatt-hour at 2:17 p.m on ICE Endex in Amsterdam. They slumped 32% last week.

“Volatility will definitely remain very high this week,” Energi Danmark said in a note on its website. “The market hopes flows from Russia will continue.”

Next-month power in Germany, the region’s biggest market, dropped for a fifth day, sliding as much as 12% to 249 euros per megawatt-hour.

Most Read from Bloomberg Businessweek

The 18 Minutes of Trading Chaos That Broke the Nickel Market ADHD Drugs Are Convenient To Get Online. Maybe Too Convenient Peloton Got Trapped in Its Trillion-Dollar Fantasy Jeff Bezos Is Heading to Space and Partying on Earth While Amazon Faces a Host of Challenges A Visual Guide to the World’s Military Budgets

©2022 Bloomberg L.P.