Gas prices in Europe hit a new record today, boosted by high demand due to the cold and geopolitical tensions between Russia and its customers.
The European reference price, the Dutch TTF, reached 162.775 euros per megawatt hour (MWh) at 12.20 Greek time, recording an increase of more than 10% compared to yesterday’s closing, breaking the previous record of October 6.
British delivery gas next month also reached a record high of 408.30 pence per unit heat.
These SPOT price levels are seven times higher than at the beginning of the year. “Europe’s gas continues to rise steadily,” say Deutsche Bank analysts.
There are two factors that explain this launch: “temperatures continue to fall in Europe” on the first day of winter and “the fact that Gazprom has not reserved additional capacity for the January gas pipeline through Ukraine” . One third of European gas comes from Russia.
Gas reserves in Europe were used up during the prolonged winter of 2020 and have not been replenished since. Added to this is the reduced efficiency of renewable energy sources, such as wind, for meteorological reasons.
At the same time, some analysts estimate that Russia is reducing its supply to Europe in order to increase energy prices in the middle of winter and thus put pressure on the Nord Stream 2 pipeline to start operating. Moscow denies and rejects the responsibility in European gas supply decisions.
Although the construction of the pipeline has been completed, the decision to certify Nord Stream 2 by the German regulator is not expected before mid-2022.
In this context, every new diplomatic incident between Moscow and its client countries causes a wave of markets in the gas market. The most recent such incident was the deportation of two German diplomats yesterday in retaliation for a similar measure taken last week by Berlin, which accuses Moscow of orchestrating the assassination of a Chechen dissident in Germany in 2019.
Ukraine remains at the center of tensions between Moscow and the West, with Western countries accusing Russia of concentrating troops on its border with Ukraine in the face of a military strike.
The Kremlin denies the allegations and says Russia is under threat from NATO, which is arming Ukraine and increasing its air and naval forces in the Black Sea region.
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