From now traders’ worries about the natural gas ahead of next winter, a long period of lull on the price front, effectively lasting over a year.
The 2022 rally, which peaked in August of that year, with prices in Europe (TTF) soaring to 250 euros per megawatt hourseems like a distant past as today contracts for May delivery are hovering around 28 euros.
But industry players attending a conference in Amsterdam this week see risks rising and prices for contracts for next winter rising to 35 euros per megawatt hour.
Why are they worried?
Demand may remain tight and this year’s heating season in Europe closed with the highest inventories on record, but concerns are being expressed.
Among other things, they cite the uncertainty surrounding Russian gas flows through Ukraine, which are the only ones that have continued after the pipeline was shut down. Nord Stream in the summer of 2022. They also fear that next winter will be colder, which will push consumption to increase after two consecutive mild winters.
“Are we out of the crisis? I think it’s too early to say,” she said Cara Macdonald, Head of LNG & Clean Fuel Procurement at RWE . “If we have a cold winter next year, demand-side flexibility will decrease,” he added.
After Russia’s invasion of Ukraine, Europe largely replaced Russian gas flows with LNG from other sources, mainly the US, but also the Middle East and Africa. Some countries, however, such as Austria and Slovakia, still source most of their fuel via this traditional route from Russia.
Russian streams are ending
This may soon change. Speaking at the conference, its executive Gas TSO of Ukraine ruled out any deal to allow Russian gas through when the current deal expires at the end of the year. While traders don’t seem to be completely ruling out the possibility of some Russian flows, the Ukrainian statements raise a big question mark, an Axpo Holding executive said. This carries the risk of volatility rising again after 2022 and the price rally then.
Competition between Europe and Asia for LNG is also a factor, its head of LNG trading said TotalEnergies. LNG imports from China in the first quarter were up 21% from last year, and there are also signs of growing demand from markets in Thailand and Egypt.
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Nord Stream natural gas