Natural gas rose just below a record as a scorching summer in Europe sparks above-average demand and deepens an energy crisis that threatens to plunge major economies into recession.
Enchmark futures closed 2.6 percent higher as power prices surged to an all-time high. Hot and dry weather is causing river levels to drop rapidly, hampering the transportation of energy commodities. It’s likely that if supply from Russia remains limited, utilities will be forced to use more gas for backup.
“The seemingly inexorable upward trend in European natural gas continued,” analysts at Deutsche Bank Research said in a statement. “Prices have been supported by the recent European heatwave, which has dried up rivers and caused problems in transporting fuel, further compounding the continent’s existing problems on the energy side.”
Water levels at a key point on the Rhine – Western Europe’s main river for transporting fuel and other industrial goods – hit a new low this week, making passage uneconomic for many barges. Flat levels are forecast to hold for the rest of the week.
Energy prices in Europe have soared after Russia halted gas supplies, including through the vital Nord Stream pipeline.
Dutch front-month futures, the European benchmark, traded at €225.91 per megawatt-hour in Amsterdam, more than 10 times higher than the seasonal average over the past five years. The record close was €227.20 on March 7 as Russia’s invasion of Ukraine sent shockwaves through the markets. The UK equivalent rose 4.6 percent.
Russian gas giant Gazprom PJSC said yesterday that if current trends continue, European gas prices could rise to the equivalent of around €347 per megawatt hour this winter. It would thus be above the record intraday price of €345 at the beginning of March.
Rising energy costs across Europe increase the risk of gas rationing and blackouts in winter when demand is at its peak. Kosovo, one of Europe’s poorest countries, imposed the region’s first rolling blackouts, and the government urged people to limit consumption.
Meanwhile, the standoff between Germany and Russia continues over a Nord Stream pipeline turbine stuck in transit after repair work in Canada. Moscow has halted gas supplies through the link to 20pc, citing technical problems. Germany’s Economy Minister Robert Habeck said on Monday the turbine was available and Russia was using the equipment as an “excuse” to interrupt supplies to Europe.
Germany has taken one of the biggest hits from the energy crisis as it is heavily dependent on Russian supplies. The government has pushed for less consumption, warning against rationing and this week levying a levy on gas consumption. It also signed a deal with the country’s energy companies to import liquefied natural gas through two new terminals this winter.
https://www.independent.ie/business/gas-settles-just-below-record-as-tough-winter-is-expected-41917116.html Gas is leveling off just below record as a harsh winter is expected