By Swann Collins, investor, writer and consultant in international affairs. Eurasia Business news, March 7, 2022
The spot price of gas in Europe on Monday morning repeatedly updated historical records, taking a course of $ 4,000 per thousand cubic meter.
The price of the nearest (April) futures at the TTF hub reached $ 3,898 per thousand cubic meter, while on Friday trading ended at $ 2150, according to data from the ICE Futures exchange.
The average price of TTF for February was $935.
On March 2, gas prices of the nearest (April) futures on the TTF hub had already reached $2,227 per thousand cubic meter.
On the world market, uncertainty is growing with the supply of Russian energy resources – oil, coal, liquefied natural gas. In addition to the war in Ukraine that pressures energy markets and investors’ mood, there is a sharp decline in electricity generation through renewable sources.
Gazprom, meanwhile, continues to export Russian gas, according to the applications of European buyers through Ukraine, through the Nord Stream and Yamal-Europe gas pipelines. “Yamal-Europe” with the onset of Monday again operates in reverse mode, as the application for the supply of gas from Germany to Poland significantly exceeded the nomination for delivery through Poland to Germany.
Catherine MacGregor, CEO of French energy corporation Engie, is preparing its company for the possibility of a total cut in Russian gas imports. In an interview with the French business daily “Les Echos”, she explains that the resulting “unprecedented price shock” would require the intervention of the public authorities to “cap prices” and “limit demand“.
Such high gas prices will boost inflation in Europe in coming months. The annual inflation in the Euro area in January 2022 was already 5.1%, never seen since 1992. Inflation should worsen in Europe in coming months, disrupting industries and markets. This situation may force the European central bank to tighten its monetary policy in the Euro area.
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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.