UK and European gas prices rise on Russia-Ukraine concerns

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European and British gas prices hit record highs on Tuesday due to concerns that Russia’s potential invasion of Ukraine could disrupt the already growing energy supply in winter.

Derivatives related to TTF, the European wholesale gas price, soared from a record high of 116 euros / MWh on Monday to 131 euros per MW, raising energy prices for millions of homes and industries across the continent. I did. The UK equivalent has risen to £ 3.24 in Therm, surpassing October 5’s record high of £ 2.94, fueling inflation concerns.

European prices have skyrocketed by nearly 40% since the beginning of this month, hitting record highs set in October when the recovery in the global economy boosted demand and failed to meet Europe’s demand for additional gas supplies from Russia. It exceeded.

Russian President Vladimir Putin eased prices last month with an original promise to raise supply, but European storage facilities have not yet been replenished and the cold has caused further drawdowns.

Julius Baer Strategist Norbert Lucker said: “More importantly, rising tensions between Russia and Ukraine seem to contribute to supply concerns and add a risk premium to prices.”

An estimated 100,000 Russian troops are stationed on the Ukrainian border, but world leaders have asked Moscow to escalate and pursue diplomatic solutions. US officials have warned that Russia may be planning to invade Ukraine early next year. Delay the controversial NordStream 2 The risk of disrupting other supplies, not just the gas pipeline.

Germany’s Foreign Minister Annalena Baerbock said on Monday that she could not allow the Nord Stream 2 pipeline in its current form because it is not compliant with EU law.

Continent Europe currently obtains more than one-third of its total gas supply from Russia’s state-owned Gazprom via two pipelines, one via Belarus and Poland and one via Ukraine. ..

Tom Marzec-Manser of consultancy ICIS said Northwestern Europe will probably end the winter with lower gas storage levels than 2018 in the wake of a cold wave known as the “Beast from the East.”

“It’s still a functioning market. At these prices … The market is trying to reduce demand and pull in additional supply and demand,” he said.

Gas prices in Europe are beginning to exceed those of liquefied natural gas in East Asia, making it a premium spot market for cargo, Marzec-Manser added.

Nevertheless, as the number of cases of Omicron coronavirus variants increases, the government may impose more restrictions, hurt economic growth and reduce energy demand.

The International Energy Agency said on Tuesday that it expects a surge in new Covid-19 cases to slow the recovery of oil consumption as air travel and jet fuel were hit hardest. Currently, global demand is projected to increase 3.3 million barrels per day in 2020, down 100,000 barrels per day from previous forecasts.

“The surge in new Covid-19 cases will temporarily delay the recovery of ongoing oil demand, but it is not expected to improve,” the IEA said in its latest monthly report released Tuesday. rice field.

However, analysts say there was no clear benefit to the European gas market other than the calm winter. Throughout Europe, gas storage facilities are currently only 62.8% full, more than 10% below seasonal standards. If the drawdown continues at the current rate, the storage level will reach a very low level by March or April next year.

UK and European gas prices rise on Russia-Ukraine concerns Source link UK and European gas prices rise on Russia-Ukraine concerns

The post UK and European gas prices rise on Russia-Ukraine concerns appeared first on California News Times.

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