US and Germany reach agreement on Nord Stream 2 pipeline

Author: Adam Button | Category: News

Deal had been rumored

Nord Stream 2 pipeline
German broadcaster ARD reports that the US and German have a deal on the Nord Stream 2 pipeline.

The US overplayed its hand on this one, trying to help its LNG sector. Natural gas prices are too high to tolerate in Europe and Germany. Surely they'd like to help the Ukraine but not at a high cost to domestic economies, which need gas more than ever.

The WSJ earlier reported that the US side had essentially capitulated with Germany only agreeing "to assist the Ukraine in energy-related projects and diplomacy", with some token green energy investments and a promise to 'ensure' Russia pays $3B in annual tolling fees to Ukraine through 2024.

This is no surprise but it really highlights how tight the natural gas market is. Inventories in Asia and Europe are extremely low and prices are near $4 in the US. Yesterday's drop in oil prices boosted natty further on expectations that it will help to keep US drilling in check.

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