The European gas price continued its inexorable rise on Friday, boosted by the difficulty of the European Union to amass sufficient reserves to be able to do without Russian exports during the winter without creating a shortage.
The Dutch TTF futures contract, the benchmark for natural gas in Europe, traded for 249.00 euros (239.54 francs) per megawatt hour (MWh) around 11:50 GMT (1:50 p.m. CET), a level that has no longer been seen in trading since the extremely volatile early days of Russia’s invasion of Ukraine.
On Thursday, it even ended at a historic high closing at 241 euros per megawatt hour.
However, this is still far from the historic peak in session reached on March 7 at 345 euros.
Germany’s energy regulator warned on Thursday that the country risks missing its reservoir filling target set by Olaf Scholz’s government.
Regulator chief Klaus Müller warned that shortages were to be expected in some regions during the winter and that it was ‘not one winter but at least two, and the second winter could be even more hard’.
Europe is painfully trying to wean itself off Russian gas, on which Germany is particularly dependent, and which Moscow is using as a means of pressure in the context of its invasion of Ukraine.
In Germany, from October 1, importers will be able to charge 2.4 centimes more per kilowatt hour (KWh) of gas from businesses and individuals.
Even if the government has promised to amortize it for the most modest, ‘the shock on the October bill should lead to a reduction in household demand’, comment analysts at Deutsche Bank.
Boosted power consumption
Electricity, for its part, mechanically follows the evolution of gas prices, because the market is fixed on the cost of the gas (and coal) power stations called in to the rescue to ensure the balance of the system.
Prices were driven ‘by low levels of wind (for wind) as well as high costs for coal and gas-fired power’, analysts at Rystad Energy said.
At the same time, a particularly hot summer limited the production of electricity: the heat wave affected the cooling systems of the nuclear power stations and the drought prevented the barges from bringing coal to the German power stations.
However, the heat wave stimulates electricity consumption for air conditioning and ventilation, limiting the usual drop in the summer months.
Electricity for delivery next year in Germany has exceeded 500 euros per MWh for the first time in recent days, compared to just over 300 euros in early July.
‘This could be Europe’s biggest energy crisis for at least a generation,’ warns John Plassard, an analyst at Mirabaud.
Less dependent on the European market, oil prices faltered on Friday by 2.07% to 94.59 dollars for the European reference, Brent from the North Sea for delivery in October, and by 1.99% to 88.72 dollars. for the American West Texas Intermediate (WTI) which expires in September.
“There are a lot of reasons to bet on a decline, but market players seemed to have forgotten them for two sessions,” comments Stephen Brennock, analyst at PVM.
He points out that volumes are particularly thin this summer, which promotes increased price volatility and pushes the analyst to give little credit to the rebound that began on Wednesday after a surprise drop in American stocks.
“A global recession that would destroy demand remains the main concern, with discouraging data coming out of the eurozone and China,” he added.
On Friday, the strength of the dollar, boosted by the prospect of a tightening of monetary policy in the United States, also weighed on oil.
As the greenback is the reference currency of the oil market, its rise weighs on the purchasing power of investors who use other currencies.
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