European natural gas trading at equivalent of more than $200 a barrel of oil
The escalating supply crunch in Europe saw natural gas prices surge to record highs on Tuesday, as concerns are building over the possibility of a fuel insecure winter.
Gas Prices In Europe Are Now The Equivalent Of $230 Oil https://t.co/zCPWYP1hfD— zerohedge (@zerohedge) October 5, 2021
Gas in Europe jumped 23% to €117 a megawatt hour. This compares to prices being at €15 just six months ago.
What a move on European gas prices today with front month gas contract (TTF) up more than 15% to new record high €112. May 31 last year, price was € 4 per MWh. pic.twitter.com/9K6OU9fJwS— Oeystein Kalleklev (@OKalleklev) October 5, 2021
The most recent spike means that natural gas is now trading at the equivalent to over $200 a barrel of oil.
It is the latest sign that the continent's crisis is getting worse, according to analysts, who also suggest there is no immediate fix.
“Given the size of the current supply-demand gap, we don’t expect a permanent solution to be found soon,” said S&P Global Ratings’ credit analyst Elena Anankina. “Some contributing pressures may gradually subside, but we believe others represent structural shifts. These include Europe’s dependence on imports and increasing exposure to global gas markets.”
In the UK, which has been particularly badly hit by soaring costs of natural gas, prices for November jumped 14% to £2.79 per therm.
UK NBP natural gas benchmark extend gains, up more than 22% on the day. Over the last four weeks, UK wholesale natural gas prices have risen 120% !!! https://t.co/ysF7RQligt— Javier Blas (@JavierBlas) October 5, 2021
British wholesale gas as a result rose by 23% to £2.50 per therm.
Surging demand in Europe has come as economies recover from the pandemic during the winter period as European gas stockpiles are lower than usual.
Russia, generally the continent’s main provider, has limited its supplies, while production in Europe is down sharply.
European natural #gas and power prices have jumped to new records today. Stockpiles of everything from gas to coal and water for electricity production are in short supply. There's little to suggest there'll be an improvement soon. https://t.co/FYDcDlepCV @MissVee pic.twitter.com/r1eK0HaAzV— Paul Wallace (@PaulWallace123) September 30, 2021
Additionally, demand is rising in Asia, which is in a recovery process, as China faces up to its own energy supply issues.
Analysts will be looking at the output of meteorologists, as they are of the view that a slight dip in temperatures across Europe could lead to a tightening in the continent’s gas market.