Germany made a statement on gas that dropped its price sharply
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The question is, how long will the price of “blue fuel” fall?
Gas prices were not allowed to set a new record. As soon as its value in the EU came close to a historical maximum, Germany’s statement about high stocks of raw materials pushed quotes back to the level of a week ago. True, the respite may be short-lived. September promises to be “X-hour” for European energy consumers, who, in the face of exorbitant prices and limited supplies from Russia, will have to fill underground storage facilities with the volumes of fuel they need for the winter already now.
The price of gas on the European market rose to $3,500 per thousand cubic meters at the end of last week, when, against the backdrop of Gazprom’s warning about a temporary complete shutdown of Nord Stream 1, stock traders began to bully raw material prices in a panic. A new round of price growth was expected on Monday, August 31, for which the monopoly announced the start of a three-day cessation of exports through the pipeline.
In the meantime, on Monday, August 29, the cost of “blue fuel” dropped sharply to $ 2,900 – the same price for a thousand cubic meters on August 24. According to experts, the main reason for the price rollback is the statement by German Economy Minister Robert Habek that the rate of filling German storage facilities allows us to hope that gas reserves will reach 85% next month and guarantee the country uninterrupted heating next winter. According to Bloomberg, positive statistics from Berlin forced many traders to take profits, which caused prices to roll down. In addition, Gazprom has not officially confirmed the shutdown of Nord Stream 1.
Recall that the price of gas reached its historical peak on March 7, when a number of world energy consumers began to think aloud about abandoning Russian hydrocarbons. Then, from the beginning of trading on the Dutch hub TTF, the quotes of “blue fuel” literally jumped from $2,366 to $3,899 per thousand cubic meters in a matter of hours.
Even despite the current volatility, gas prices remain at such a high level that closer to the beginning of the heating season they will be able to reach another psychological level of $4,000, as Gazprom recently predicted. Moreover, as Deputy Chairman of the Security Council Dmitry Medvedev, who headed the board of directors of the gas monopoly for many years, said, by the end of the year, quotes could rise to $5,000.
Europeans, on the one hand, are gradually accumulating in their underground storage facilities the volumes necessary to overcome the winter cold. On the other hand, will they be able to buy energy resources at exorbitant prices that can last for several months, and will the countries of the continent not have to go into reserves more often than replenish them when frost sets in?
A number of countries – Bulgaria, Croatia, Hungary, Latvia and the Netherlands – unlike the Germans, cannot boast of their gas bins, the accumulation volumes in which do not yet inspire hope for a successful overcoming of the heating season. As a result, for the first time in the existence of the European Union, inflation runs the risk of accelerating above 10% (in Poland, the price growth rate is already over 15%), the industry will have to reduce and close production, which will cause the economy as a whole to fall and lead to a surge in social tension.
Meanwhile, as TeleTrade chief analyst Mark Goykhman explains, Russia, taking advantage of the price environment, continues to receive excess profits from the sale of raw materials – according to Bloomberg, in 2022 our country can increase revenues from oil and gas exports to $ 320 billion, which is almost a third more last year’s figures. However, in strategic terms, abnormally high gas prices carry risks for the Russian Federation as well. “Putted in a rigid framework between high energy prices and a decrease in exports from Russia, Europeans may think not so much about lifting sanctions against Moscow, but about an accelerated search for funds and opportunities to reduce their dependence on our energy resources,” the expert warns. If there are no affordable and stable alternatives to Russian hydrocarbons yet, then in a few years new channels and routes will be built and will cause a reduction in the Russian share in the continent’s fuel market. And this, according to Goykhman, threatens to lead to a decrease in export earnings from Russia’s transactions with regular solvent EU customers.
Newspaper headline:
Gas given time for a new record
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