‘Jump’ for European gas – Over 135 euros per megawatt hour

LAST UPDATE: 16:59

European energy prices are “jumping” by 13.65%, with the megawatt hour currently hovering at 136.75 euros, following the intensification of the “energy war” by Russia, which reduced supplies through a larger connection to the continent. in less than half the usual quantities, according to Bloomberg.

Supply cuts are hitting Europe, with Engie, Uniper and OMV AV reporting lower commissions. Germany has described the cuts through the Nord Stream pipeline as “politically motivated” and aimed at disrupting markets, disputing a statement from Russian energy company Gazprom that the outage was due to technical issues.

It is noted that Gazprom has started early this morning to reduce the volume of gas it supplies to Germany via the Nord Stream 1 pipeline to 67 million cubic meters per day.

The new reduction in gas supplies came after the company had announced the day before yesterday, Tuesday, that it would reduce the maximum daily amount of gas supplies to 100 million cubic meters, from 167 million cubic meters.

Overall, the latest cut represents a reduction of about 60% in gas supplies to Germany in just two days.

European countries have been worried for months about cuts in Russian supplies in retaliation for sanctions imposed on Moscow over its invasion of Ukraine. This crisis could “boost” inflation even higher. Germany has already activated the first phase of a three-step emergency plan to ensure security of supply and may be forced to take further action if the cuts intensify. Berlin, however, said it could provide alternative supplies at this time.

The energy crisis is exacerbated by the supply crisis created by a major disruption in the US. In particular, a major liquefied natural gas (LNG) export facility in Texas – Europe’s vital source of supply – will remain closed for longer than originally expected following a fire last week.

Europe, which relied on US LNG to fill the gap left by declining Russian flows, may need to compete more fiercely with Asian buyers to secure shipments as the bloc rushes to replenish storage facilities before demand peak again in winter.

In this climate, the Dutch futures contract – the European benchmark – rose 10% to $ 132.70 per megawatt hour. Earlier, prices rose to the highest intra-conference level since March 11. The corresponding British contract increases by 1%.

Cuts are raising prices in Asia as well. According to traders, Asian spot LNG prices on Thursday rose more than $ 30 per million British thermal units for the first time since April. This is the highest level for this time of year and is a “jump” of about 50% in the last month.

Further disruptions to gas or LNG flows could boost prices. “If there was another downturn like the one at Freeport LNG in the US, prices could easily jump 50%,” said Ron Smith, senior oil and gas analyst at BCS Global Markets.