Market Overview

28 June 2022

Gas Attack on Europe

The gas market in Europe was on alarm recently as prices for July 2022 Dutch TTF gas futures jumped to 133 Euros per MW last Friday. Prices scaled back to 129 Euros on Tuesday, but they are unlikely to reach a deeper correction.

Prices surged as Russia significantly reduced gas supplies to Europe during the period when gas was being replenished into gas storages in preparation for the coming winter season. Storages are reported to be filled by 59% of their total capacity, which is a low percentage for this time of the year. The major pipeline North Stream 1 is operating under 40% of its capacity due to technical reasons so it is delivering less than 100 million cubic meters per day. Moreover, Russia announced it will cut supplies completely in July for gas pipeline maintenance. German Economy Minister Robert Habeck said he can’t be sure that Russia will resume supplies through a pipeline after  maintenance is complete. “I would have to lie if I said I didn’t fear that,” he said. Klaus Mueller, the head of the German federal network agency warned that consumer prices could triple if supplies stop coming in and urged to save energy wherever possible. Germany raised the country’s gas risk level to the second highest “alarm” phase, one step below the third and final “emergency” stage which would involve state control over energy distribution. EU climate policy chief Frans Timmermans said a contraction of gas supplies affected a dozen of European countries and may force EU states to greatly reduce production, pushing a recession onto the European economy and curb gas consumption in the winter. Some EU countries have increased energy generation by coal-fueled power plants. The Netherland is considering boosting gas production at Groningen gas mega field as a last resort. The field was supposed to be closed off after drilling caused many damaging earthquakes in surrounding towns.

The gas market is likely to suffer extreme volatility as the start of technical maintenance of North Stream 1 scheduled for July 11 draws closer. The European Central Bank’s President Christine Lagarde statement this week may also affect gas prices, as well as some other economic developments in the EU, such as the consumer confidence index, PMI readings, and unemployment indications scheduled to be published later during this week. The Organisation of the Petroleum Exporting Countries and its allies (OPEC+) meeting on Thursday would be a major event that could also affect gas prices.

Nevertheless, the upside trend for gas prices may continue as prices are moving towards 200-206 Euros per MW, a range last seen in March this year.

 

Disclaimer:

Analysis and opinions provided herein are intended solely for informational and educational purposes and don't represent a recommendation or investment advice by TeleTrade.

Mark Goichmann
Market Focus

Material posted here is solely for information purposes and reliance on this may lead to losses. Past performances are not a reliable indicator of future results. Please read our full disclaimer.

Open Demo Account
I understand and accept the Privacy Policy and agree that my name and contact details can be used by TeleTrade to contact me about the information I have selected.
23 International Awards
Have a question?

We are ready to assist you in every step of your trading experience
by providing 24/5 multilingual customer support.

Follow us

Risk Warning: Trading Forex and CFDs on margin carries a high level of risk and may not be suitable for all investors. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76.41% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Prior to trading, you should take into consideration your level of experience and financial situation. TeleTrade strives to provide you with all the necessary information and protective measures, but, if the risks seem still unclear to you, please seek independent advice.

© 2011-2022 Teletrade-DJ International Consulting Ltd

Teletrade-DJ International Consulting Ltd is registered as a Cyprus Investment Firm (CIF) under registration number HE272810 and is licensed by the Cyprus Securities and Exchange Commission (CySEC) under license number 158/11.

The company operates in accordance with the Markets in Financial Instruments Directive (MiFID).

The content on this website is for information purposes only. All the services and information provided have been obtained from sources deemed to be reliable. Teletrade-DJ International Consulting Ltd ("TeleTrade") and/or any third-party information providers provide the services and information without warranty of any kind. By using this information and services you agree that under no circumstances shall TeleTrade have any liability to any person or entity for any loss or damage in whole or part caused by reliance on such information and services.

TeleTrade cooperates exclusively with regulated financial institutions for the safekeeping of clients' funds. Please see the entire list of banks and payment service providers entrusted with the handling of clients' funds.

Please read our full Terms of Use.

To maximise our visitors' browsing experience, TeleTrade uses cookies in our web services. By continuing to browse this site you agree to our use of cookies.

Teletrade-DJ International Consulting Ltd currently provides its services on a cross-border basis, within EEA states (except Belgium) under the MiFID passporting regime, and in selected 3rd countries. TeleTrade does not provide its services to residents or nationals of the USA.

Material posted here is solely for information purposes and reliance on this may lead to losses. Past performances are not a reliable indicator of future results. Please read our full disclaimer.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76.41% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Choose your language/location