Gas prices and futures are rising due to reduced supplies and the coming winter

Gas prices in Europe may rise to five thousand dollars per thousand cubic meters, and there are good reasons for that.

At the opening of trading on September 5, the price of gas in Europe immediately jumped by 35 percent and exceeded $3 000 per thousand cubic meters, according to data from the ICE exchange. The price of October futures on the Dutch TTF hub rose to $2 855 per 1 000 cubic meters, while on Friday, September 2, trading closed at $2 213 per 1 000 cubic meters.

There are a lot of factors affecting the price of gas in the European Union, and the main one is the risk of a complete cessation of gas supplies from Russia. The growth of 30 percent is due to the non-startup after the preventive shutdown of Nord Stream, and there is no certainty yet when it can be launched again. On September 2, Gazprom announced a complete shutdown of the Nord Stream gas pipeline for an indefinite period. Gazprom explained that it found major violations during preventive maintenance.

The reaction of Scholz, who announced the termination of gas purchases from Russia, was already a response to the current situation. Moreover, a few days earlier, he had said that Germany could not completely abandon Russian gas yet.

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The EU will be able to fill its gas storage facilities ahead of schedule by two months. According to these data, as of August 27, the storage facilities were 79.4% full, while according to the plan, the 80% mark was supposed to be overcome only on November 1. However, gas storage, as the agency pointed out, provides only about 25-30% of the fuel consumed in the EU in winter, so they cannot guarantee the energy security of the continent.

Weather conditions in the European Union this winter, the possibilities and effectiveness of measures to save fuel and rationing of its consumption, the extent to which alternative fuels are used, that is, coal and fuel oil, energy generation by renewable energy sources, the risks of disruption of liquefied natural gas supplies from the United States against the backdrop of the autumn hurricane season – all this also affects gas prices today.

In the short term, gas prices in Europe can only grow. Most likely, the price of plus or minus two thousand dollars per cubic meter will remain until spring. Peak values ​​can reach four to five thousand per thousand cubic meters in some specific short periods of time, but are unlikely to persist for a long time.