Natural gas prices have skyrocketed by 40%! Europe's Warning of Cold Winter | Natural Gas | Cold Winter
Last year, the energy crisis that continued to plague Europe attracted attention from all sectors. Since the beginning of this year, natural gas futures prices in Europe have remained stable, but yesterday there was a sudden surge. What is the reason behind it?
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Supply tightening, European natural gas futures prices surged nearly 40% on the 9th
On Wednesday local time, European natural gas prices surged by nearly 40% during trading. The trend of the monthly contract price of the European benchmark TTF natural gas futures showed that the futures price rose from nearly 30 euros per megawatt hour on Tuesday local time to over 43 euros per megawatt hour during trading, reaching the highest point since mid June. The final settlement price was 39.7 euros, which closed up approximately 28% on the same day.
The sharp fluctuations in prices are mainly due to workers planning to go on strike at some important liquefied natural gas plants in Australia.
According to the Australian Financial Review, 99% of the 180 employees responsible for production on Woodside Energy's liquefied natural gas platform in Australia support the strike action. Employees need to give 7 days' advance notice of the strike, so the liquefied natural gas plant may shut down as early as next week. In addition, employees of Chevron's local liquefied natural gas plant have also threatened to go on strike. These may all hinder the export of Australian liquefied natural gas.
In fact, liquefied natural gas from Australia rarely flows directly to Europe. It is mainly supplied by Asian suppliers. However, analysis suggests that if Australia's supply decreases, Asian buyers will increase their purchases of liquefied natural gas from the United States and Qatar, competing with Europe.
In addition, some traders were eager to close their positions after learning of the possibility of supply tightening yesterday, which led to a price increase.
Relieve winter supply pressure, EU increases Ukraine's natural gas reserves
On the EU side, preparations have already been made for this winter, with natural gas usage usually twice that of summer. Currently, the EU's natural gas reserves are close to 90% of its capacity. However, the EU's natural gas storage facilities can only store up to 100 billion cubic meters, while the EU's annual demand is approximately 350 billion to 500 billion cubic meters. Recently, the EU has discovered an opportunity to establish strategic natural gas reserves in Ukraine, and it is reported that Ukraine's facilities can provide an additional 10 billion cubic meters of storage space for the EU.
The data also shows that in July, the reserved capacity of the EU's natural gas pipeline to Ukraine reached its highest level in nearly three years, and it is expected to double this month.
Industry insiders warn that natural gas prices in Europe may continue to fluctuate
With the EU increasing its natural gas reserves, some industry insiders have pointed out that this winter may be much safer than last year, but have also warned that European natural gas prices will continue to fluctuate for the next one to two years.
Paul Gallo, CEO of the Italian National Gas Distribution Company: Currently, the EU's natural gas reserves are almost full, but I believe that there will be significant fluctuations in European natural gas prices in the next 12 to 24 months.
Citigroup predicts that if the strike in Australia starts soon and continues into winter, it may lead to European natural gas prices doubling to around 62 euros per megawatt hour in January next year.
