By Swann Collins, investor, writer and consultant in international affairs.
Eurasia Business news, March 2, 2022
The spot price of gas in Europe continues to rise sharply on Wednesday afternoon – already by 57% compared to Tuesday’s close.
Gas prices of the nearest (April) futures on the TTF hub reached $2,227 per thousand cubic meter, while on Tuesday trading ended at $1,418, according to data from the ICE Futures exchange.
After this peak, it turned down, as information appeared about a new short-term booking of the Yamal-Europe gas pipeline from 15:00 Moscow time until the end of the gas day. While we are talking about 0.8 million cubic meters per hour, which is 20% of the pipe’s capacity, by Thursday morning an additional 15 million cubic meters will come to Europe from Gazprom’s gas.
This is a new historical record for the global gas market at the beginning of the year. The previous historical maximum price was recorded on December 21, 2021 – $2,138 per thousand cubic meters.
The average price for TTF for February was at the level of $ 935.
In addition to the difficult political situation around Ukraine, there is a slight decrease in temperature in Europe and a sharp decrease in electricity generation from renewable sources – wind generation. This increased need for heat and power adds pressure on the gas market.
Higher gas prices will boost inflation in Europe in coming months. The annual inflation in the Euro area in January 2022 was 5.1%, never seen since 1992.
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Oil prices are also driven up by geopolitical tensions and are over $ 110 a barrel on Wednesday as traders worry of a possible disruption of exports from major oil producer Russia, after severe sanctions taken last week by the US and European Union against Russians major banks and the Russian central bank. April futures for WTI crude oil hit $ 108.62 while May futures for Brent crude oil hit $ 110.42. The last time oil prices hit such level was in 2014, during the Ukrainian crisis. Investors should prepare to lasting high inflation in industrial and consumer prices.
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© Copyright 2022 – Swann Collins, investor, writer and consultant in international affairs.