European Energy Prices Continue Run of Record Highs
European gas futures surged to a record for a fourth consecutive day, as supplies remained stubbornly low. Meanwhile, year-ahead German and France power prices also reached new highs.
With just two days before the region’s official heating season starts, concerns remain over flows from Russia after a colder and longer winter depleted the continent’s stockpiles to the lowest in more than a decade for this time of the year.
Supply through a major transit route from the country to Germany’s Mallnow rebounded from Tuesday’s drop, which Gazprom PJSC said was because a customer asked to receive less. However, the pipeline is still delivering lower volumes than Monday.
Tropical Storm Sam is moving slowly in a northwestward in the direction of the U.S. East Coast, according to the Miami-based National Hurricane Center, compounding fears of more weather-based disruption that could indirectly affect Europe.
Gas futures on the Dutch Title Transfer Facility hub increased as much as 8.9% to 87.50 euros per megawatt-hour and the U.K. equivalent benchmark gained as much as 11% to 217 pence per therm.
German power for next year rose to as much as 123.12 euros per megawatt-hour and the French equivalent increased to 127.50 euros per megawatt-hour on Wednesday. Both are record highs.
High gas and power prices in Europe have already forced some fertilizer and other industrial facilities to shut, and a number of U.K. energy suppliers have also gone bust. TotalEnergies SE Chief Executive Officer Patrick Pouyanne said the region’s gas crisis is likely to last all winter as stockpiles are lower than usual, while Rabobank warned that a cold winter will leave global storages practically empty.
“This would be a catastrophic scenario which the market is trying to solve for now by increasing prices so much that demand is forced to ration,” Rabobank said in a note.
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