Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

Spike in gas prices threatens big troubles for European economies

Spike in gas prices threatens big troubles for European economies

There are concerns that buyers, particularly big industrial users and household energy suppliers, become short of the commodity further down the line because they are delaying purchasing now in the hope of price reductions in the near term.
Wholesale gas prices are back to trading at close to a five-month high.

The price of British gas for immediate delivery is off 2.5% this morning but on Monday traded as high as 503p a therm - a level last seen in the immediate aftermath of Vladimir Putin's invasion of Ukraine.

Similarly, day-ahead prices are off by nearly 2% today, but on Monday traded as high as 505p a therm which, again, is a level not seen since early March.

The immediate trigger for Monday's surge was news late last Friday night that Russia is to suspend supplies of natural gas to Europe via the Nord Stream 1 pipeline for three days at the end of the month for what it described as maintenance purposes.

No one really believes that, given Moscow's increased willingness to weaponise gas supplies in response to European sanctions against it, but the impact is the same.

The concern is that, after the three-day maintenance period is over, Russia will not resume supplies.

The development comes at a time when European countries are scrambling to fill up their gas storage facilities ahead of the winter in anticipation of a possible complete cut-off of Russian gas, but also at a time when, due to the recent heatwave, heavier use of air conditioning systems has pushed up energy demand across Europe.

That scramble for gas means European countries are now bidding more aggressively for cargoes of liquified natural gas that might previously have been bought by countries, like the UK, which only bought very small quantities of gas from Russia.

Adding to the tightness in supplies is the fact that Gassco, the Norwegian gas pipeline operator, has been reducing supplies in recent days.

The expectation is that prices will remain at elevated levels for some time - although it is worth noting that gas consumption in continental Europe has been unusually low this summer as big industrial users, such as the German chemicals sector, have not been using as much gas as they were this time last year.

It seems likely that such demand as there has been, then, has been due to European countries filling their gas storage facilities.

The good news is that Germany, the biggest consumer, is making unexpectedly good progress in filling its facilities and is currently in line to hit the targets it has set itself for this winter.

Germany has also succeeded in reducing its gas use quite significantly in recent months - down by nearly one-third since the spring - by reopening coal-fired power stations.

It is also worth bearing in mind that, just because the price of wholesale gas is currently at elevated levels, it does not follow that customers are buying at these prices.

That is certainly the anecdotal evidence from energy markets.

This raises the concern that gas buyers, particularly big industrial users and household energy suppliers, become short of the commodity further down the line because they are delaying buying now in the hope of price reductions in the near term.

That could spell big problems for European economies next year.

In the meantime, proof came today that Germany in particular is already hurting, with "flash" purchasing managers index survey data for August suggesting that Europe's biggest and most important economy is contracting.

While the UK is now expected to enter recession later this year, there is a growing body of evidence that Germany is already in recession, which will have a knock-on effect across the continent - including the UK.
AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
Severe Heatwave Claims 2,300 Lives Across Europe
Declining Beer Consumption Signals Cultural Shift in Germany
Emails Leaked: How Passenger Luggage Became a Side Income for Airport Workers
Polish MEP: “Dear Leftists - China is laughing at you, Russia is laughing, India is laughing”
Western Europe Records Hottest June on Record
BRICS Expands Membership with Indonesia and Ten New Partner Countries
Elon Musk Founds a Party Following a Poll on X: "You Wanted It – You Got It!"
China’s Central Bank Consults European Peers on Low-Rate Strategies
France Requests Airlines to Cut Flights at Paris Airports Amid Planned Air Traffic Controller Strike
Poland Implements Border Checks Amid Growing Migration Tensions
Emirates Airline Expands Market Share with New $20 Million Campaign
Amazon Reaches Milestone with Deployment of One Millionth Robot
Yulia Putintseva Calls for Spectator Ejection at Wimbledon Over Safety Concerns
House Oversight Committee Subpoenas Former Jill Biden Aide Amid Investigation into Alleged Concealment of President Biden's Cognitive Health
Amazon Reaches Major Automation Milestone with Over One Million Robots
Extreme Heat Wave Sweeps Across Europe, Hitting Record Temperatures
Meta Announces Formation of Ambitious AI Unit, Meta Superintelligence Labs
Robots Compete in Football Tournament in China Amid Injuries
China Unveils Miniature Insect-Like Surveillance Drone
Marc Marquez Claims Victory at Dutch Grand Prix Amidst Family Misfortune
Germany Votes to Suspend Family Reunification for Asylum Seekers
Budapest Pride Parade Draws 200,000 Participants Amid Government Ban
Southern Europe Experiences Extreme Heat
Xiaomi's YU7 SUV Launch Garners Record Pre-Orders Amid Market Challenges
Jeff Bezos and Lauren Sanchez's Lavish Wedding in Venice
Russia Launches Largest Air Assault on Ukraine Since Invasion
Massive Anti-Government Protests Erupt in Belgrade
Iran Executes Alleged Israeli Spies and Arrests Hundreds Amid Post-War Crackdown
Hungary's Prime Minister Criticizes NATO's Role in Ukraine
EU TO HUNGARY: LET THEM PRIDE OR PREP FOR SHADE. ORBÁN TO EU: STAY IN YOUR LANE AND FIX YOUR OWN MESS.
Hungarian Scientist to Conduct 30 Research Experiments on the International Space Station
NATO Members Agree to 5% Defense Spending Target by 2035
NATO Leaders Endorse Plan for Increased Defence Spending
U.S. Crude Oil Prices Drop Below $65 Amid Market Volatility
International Astronaut Team Launched to Space Station
Macron and Merz: Europe must arm itself in an unstable world
Germany and Italy Under Pressure to Repatriate $245bn of Gold from US Vaults
Iran Intensifies Crackdown on Alleged Mossad Operatives After Sabotage Claims
Trump Praises Iran’s ‘Very Weak’ Response After U.S. Strikes and Presses Israel to Pursue Peace
Oil Prices Set to Surge After US Strikes Iran
BA and Singapore Airlines Cancel Dubai Flights Amid Middle East Tensions
Trump Faces Backlash from MAGA Base Over Iran Strikes
Meta Bets $14 B on Alexandr Wang to Drive AI Ambitions
FedEx Founder Fred Smith, ‘Heart and Soul’ of the Company, Dies at 80
Chinese Factories Shift Away from U.S. Amid Trump‑Era Tariffs
Pimco Seizes Opportunity in Japan’s Dislocated Bond Market
Labubu Doll Drives Pop Mart to Status as China’s Most Valuable Toy Maker
Global Coal Demand Defies Paris Accord Goals
United States Conducts Precision Strikes on Iran’s Nuclear Sites
US strikes Iran nuclear sites, Trump says
×