European natural gas traders know the sector is facing a harsh winter, but some are starting to make bold predictions.
wholesale europe gas Prices hit an intraday high of €343 per MWh on August 26th. This equates to almost $580 per barrel of oil equivalent, which has since fallen to around €200/MWh.
Nearly 10 times the average level of the last decade and more than double the level seen in early June, before Russia cut supplies on its largest export pipeline to Europe, the Nord Stream 1 pipeline, it hit a historic low. Prices are still very high by the standards.
But traders said recent price action suggested the market may have reached a tipping point, and prices could begin to stabilize in the coming weeks. Invasion of Ukraine.
“We may have a welcome respite for the winter,” said an analyst at a Swiss energy trading company, who requested anonymity. “It doesn’t mean the situation has been resolved, but even a temporary moment of slightly lower prices would be welcome.”
Goldman Sachs this week predicted that European prices would fall over the winter and could dip below €100/MWh by spring, as traders rush to replenish storage facilities next summer. expected to recover to
Some traders and analysts say the fact that Russia has already cut gas supplies to Europe by about 80% undermines President Vladimir Putin’s ability to bring more surprises to the market.
Especially after Russia Announcement of long-term leave Prices for the Nordstream 1 pipeline to Germany this month initially jumped when the market reopened, but then gave up all gains within two days.
Europe’s gas storage target, which has driven traders to buy supplies ahead of winter, has reached 84% of capacity, well ahead of schedule. Buying frenzy has eased slightly, although concerns remain about whether there will be enough supply on the continent this winter.
Analysts also expect technical reasons to have affected the slide. EU is Discussed a potential price cap Traders’ margin requirements have skyrocketed, pushing some funds out of the market, while import uncertainty has increased.
These losses are more easily reversible.
“We believe the policy risks that have prevented traders from taking long benchmark positions have been overstated,” analysts at Energy Aspects said this week.
However, gas prices remain volatile, so the price drop may not last long. It rose about 25% on Wednesday and Thursday, showing how balanced the market is.
Prices have fallen more than €100 from their summer highs, but governments still face hundreds of billions of dollars in costs to partially shield households and businesses from the impact of rising prices.
A very cold Northern Hemisphere winter—Europe, Asia, or both—probably increase competitiveness For sea freight of liquefied natural gas, prices are likely to rise again given the fuel’s important role in heating.
Gas traders have also been keeping a close eye on the US hurricane season, which has traditionally been a bigger concern for global oil markets.
The US has become the largest exporter of LNG to Europe, so storm damage to export terminals could lead to dramatic price increases across the Atlantic.
Demand is also a concern. While the government’s efforts to protect households from the effects of rising gas prices have been widely welcomed, there are also concerns that they are dampening the incentives for people to conserve energy use at home.
Goldman Sachs’ price rise forecast for next year rests in part on higher-than-expected demand due to government intervention to protect homes and businesses.
Unlike the first six months of the year, Europe will have to replenish its stocks after winter, and there may be no Russian exports at all.
The EU’s plans to reduce gas demand by an average of about 15% this winter are already facing challenges.
Tom Marzec-Manser of energy consultancy ICIS said consumption in Europe fell by 138 million cubic meters per day, or about 16 percent, over the summer, but demand doubled.
https://www.ft.com/content/c112f80e-fef5-4bbc-bfaf-cc357bdbf991 European gas traders dare to dream that prices have peaked