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The price of European gas continues to soar, temporary closure of Nord Stream | War in Ukraine

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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 has caused the price of the Dutch TTF futures contract to rise to 257.40 euros (335.76 CAD). , unheard of at the end of the session.

During the session, it had only exceeded this level during the extremely volatile first days of the invasion of Ukraine by Russia to reach an all-time high on March 7 at 345 euros.

Huge pipes in a gas terminal, near the Nord Stream logo.

The Lubmin gas terminal in Germany is the link between Russian oil and the European gas distribution network.

Photo: Reuters/Hannibal Hanschke

While Gazprom has said that gas deliveries will resume after a shutdown from August 31 to September 2, the market remains nervous: the European Union accuses Moscow of using gas as leverage in the context of its invasion of Ukraine.

As a result, the German energy regulator signaled on Thursday that the country was in danger of missing its target for filling its reservoirs set by the government of Olaf Scholz.

The head of the regulator Klaus Müller warned that shortages were to be expected in certain regions during the winter, and that it was not a question not one winter, but at least two, and the second winter could be even more difficult.

Europe is painfully trying to wean itself off Russian gas, on which Germany is particularly dependent.

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In Germany, from 1er October, importers will be able to levy 2.4 cents 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 demandcommented the analysts of Deutsche Bank.

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.

Prizes have been drawn by low wind levels [pour l’éolien] as well as high costs for coal and gas electricityRystad Energy analysts pointed out.

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 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. »

A quote from John Plassard, analyst at Mirabaud

In the wake of gas prices, Oil, which had started the session lower, rallied: +0.76% to $97.32 for the European benchmark, Brent from the North Sea for October delivery. , and +1.14% to $91.17 for the US West Texas Intermediate (WTI) which matures in September.

The rebound in prices does not convince all observers.

There are plenty of reasons to bet on a decline, but market participants seemed to have forgotten about them for two sessionscomments 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 worry, with bleak data coming out of the euro zone and Chinahe adds.

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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