The spot price for gas in Europe continues to soar and is already 57% above Tuesday’s closing.
Prices for the nearest, April futures contracts at the TTF hub have broken the $2,000-mark, rising first to $2,011 and then an all-time high of $2,227 per thousand cubic meters on Wednesday afternoon, the previous high being $2,138 on December 21. These contracts closed Tuesday at $1,418, according to ICE Futures exchange data.
But that appears to have been the peak, with prices swinging down on news of a new short-term booking for Yamal-Europe pipeline capacity from 3:00 p.m. Moscow time until the end of the gas day. So far it looks like there will be an additional 0.8 million cubic meters per hour, which is 20% of the pipe’s capacity, in which case an additional 15 mcm of Gazprom gas will be delivered to Europe by morning.
The average TTF price on February was $935.
Apart from the Ukraine crisis, gas prices have risen in Europe due to an abrupt drop in temperatures this week and in wind power generation.
Spot prices for gas in Europe have topped $1350/1,000 cubic meters, their highest since early October, when prices surged to near an implausible $2,000/1,000 cubic meters. On Monday, the price of the closest (January) TTF futures on the ICE Futures exchange reached 116.395 euros per MWh, that is $1,358 per 1,000 cubic meters. In November, day-ahead contracts on the TTF traded at an average of $945, in December, at an average of $1,134/1,000 cubic meters. The average since the start of the year has reached $512.
Experts said that the latest spike in prices could be traced to a Sunday report by the Frankfurter Allgemeine Zeitung regarding the stance of Germany’s new foreign minister, Annalena Baerbock, on the Nord Stream 2 pipeline. The newspaper said that Baerbock, a representative of the Green Party, has always opposed the pipeline, but was compelled within coalition negotiations to accept the Social Democrats’ unwillingness to forgo the pipeline, which has already been completed. However, now that she has assumed the role of foreign minister, she is constantly being reminded about her previous stance.
The current level of gas reserves in European UGS facilities has already reached 62.83% of their maximum capacity as of Sunday morning, which is 17 percentage points below average figures over the past five years.
The European weather forecast for the current week envisages a new warming (much like in the same period of the previous year).
Wind generation in the past week (December 6 through December 12) accounted for 15.6% of the European energy balance after 18.5% in the preceding week (November 29 through December 5).
The Council of the European Union has added Argentina, Colombia, Namibia and Peru to the list of countries for which travel restrictions should be lifted. Ukraine also remained on the list of countries for whose residents the EU Council recommends gradually lifting travel restrictions at external borders.
“Following a review under the recommendation on the gradual lifting of the temporary restrictions on non-essential travel into the EU, the Council updated the list of countries, special administrative regions and other entities and territorial authorities for which travel restrictions should be lifted. In particular, Argentina, Colombia, Namibia and Peru were added to the list,” the EU Council said in a statement on the website on Friday.
As stipulated in the Council’s recommendation, this list will continue to be reviewed every two weeks and updated as appropriate.
The spot price for gas in Europe again climbed above $1,000 per thousand cubic meters at opening of trading on Wednesday, following a correction on Tuesday afternoon.
The price of the nearest (October) TTF futures on the ICE Futures exchange on Wednesday morning reached 83.4 euros per MWh, or $1,007 per thousand cubic meters, according to exchange data.
On Tuesday, the price reached a historical record of $1,040, but corrected below $950 in the second half of the day.
This could have been prompted by the publication of Wednesday’s Yamal-Europe pipeline pumping nomination – it should have recovered almost to the maximum after dropping by 50% all at once. However, the evening came with an update on the pipeline’s pumping assignment – it had only partially recovered.
On Monday, the Yamal-Europe pipeline was pumping 3.4 million cubic meters per hour; on Tuesday, the flow dropped to 1.5 million cubic meters per hour (Gazprom commented that “this is a temporary situation connected to a request by one customer”), and on Wednesday, it only increased to 2.5 million cubic meters per hour.
The global driver of European gas prices – LNG prices in Asia – also continued to rise from Tuesday to Wednesday, forcing Europe to maintain a competitive price level.
DTEK Energy Holding has not abandoned plans to invest in the generation of electricity from renewable sources in Europe, and is now exploring opportunities for this in different countries, CEO of DTEK Renewables Maris Kuniсkis has said.
“Yes, this is in our focus. Plans to invest in Europe remain. As long as there is no stability in Ukraine, we focus on abroad,” he said during the 12th International Ukrainian Energy Forum of the Adam Smith Institute on Friday.
At the same time, he said that, since the market in Europe is also changing, the company has to reorient itself to other countries, abandoning the development of projects in those that were considered in 2020. In addition, Kuniсkis did not disclose the details of possible projects.
The volume of trade between Ukraine and Russia has dropped by nearly 84% over the past six years, Ukrainian Prime Minister Denys Shmyhal said at a joint press conference with European Commission Vice-President for Interinstitutional Relations and Foresight Maros Sefcovic in Kyiv.
“In fact, the volume of annual trade from Russia has dropped over the past six years by nearly 84%, from $37 billion to $7 billion. Trade turnover between Russia and Ukraine is gradually declining. At the same time, the volume of trade [between Ukraine and] Europe has grown to over 40%, which means it has grown by more than fivefold. The replacement of markets is underway, and Ukraine is learning to manufacture goods of higher quality, in line with European standards, which meets the course of our development,” Shmyhal said, when asked by Interfax-Ukraine what share of Ukrainian exports has been affected by Russia’s recently-introduced ban on imports of certain products from Ukraine and how the Ukrainian government would respond to it.
Shmyhal insisted that he was talking not about “trade wars” but about the Ukrainian market’s natural reorientation toward the European and other markets.
As was reported earlier, the Russian government extended a list of products that cannot be imported from Ukraine on June 28, 2021.
