European gas prices up as Russia's war in Ukraine intensifies
European natural gas prices increased for a second day as concerns that Russia’s intensifying war in Ukraine could disrupt supplies countered steadily accumulating stockpiles in the continent.
European natural gas prices are expected to continue rising in the short term as fears of a potential disruption in supplies from Russia continue to weigh on the market. However, concerns about ample supplies of gas in storage in Europe may start to cap price gains in the longer term.
It's been a volatile week for the markets, but benchmark futures have risen 3.9% over the last two sessions. After bottoming out at the lowest level in over three months earlier in the week, things are starting to look up again.
Although there are no immediate threats to Russian gas transit through Ukraine, markets are nervous about the potential risks to pipelines. This is the last remaining route carrying Russian fuel to western Europe, and any disruptions could have significant consequences. President Vladimir Putin's recent threats of more missile attacks have only increased the anxiety around this issue.
After a recent attack on a Russian natural gas pipeline, President Vladimir Putin has warned that all of the country's infrastructure is at risk. This is a worrying development for Russia, which is heavily reliant on its energy exports.
If Russia cuts off electricity flows to Europe, the continent could be facing widespread blackouts and rationing, according to consultant Inspired Energy Plc. In a note, the company warned that such a scenario could become inevitable if Russia doesn't provide enough electricity to meet Europe's demand.
Despite having almost filled its gas storage facilities, Europe could still see some household freezing this winter if there are severe cold snaps, according to Russia's Gazprom PJSC. This is a potential problem for the continent, which has been increasingly reliant on Russian gas in recent years. Gazprom's warning highlights the importance of diversifying Europe's energy sources in order to avoid being held hostage by any one supplier.
It is clear that the energy crisis is not going to be a short-term issue, and that it will have a significant impact on Europe. Next winter could be particularly tough, and it is clear that the energy crisis is here to stay.
The future of gas looks bright, as prices continue to rise. This is good news for producers and consumers alike, as it means that demand is high and supplies are tight. This trend is likely to continue in the short-term, so those who are able to take advantage of it should do so.
Bullish Sentiment Returns to Wall Street
Analysts at trading firm Energi Danmark said in a note that buying interest appears to be increasing following the recent price falls, and that the recent escalation to the war in Ukraine also adds to the bullish sentiment.
It's good news for consumers that gas prices have eased from their highs in late August, thanks to higher than normal stockpiles and strong liquefied natural gas imports. However, with mild weather forecast for much of Europe in the coming week, it's unlikely that prices will fall further in the short term.
As energy prices continue to surge, European leaders are stepping up their policy efforts to prevent the resulting inflation from further squeezing household finances. With the highest inflation in decades already being experienced, these efforts are aimed at preventing the energy crisis from further engulfing European economies.
The European Commission is considering temporarily capping the price of gas used for electricity generation, in order to reduce demand and ease pressure on prices. Commissioner Kadri Simson said that tougher binding gas demand reductions may also be needed in the short term. This would help to ensure that gas prices remain stable and affordable for consumers and businesses.