European and UK gas prices surged on Wednesday by more than 25 per cent, energised by soaring demand before the northern hemisphere winter.
Europe’s reference Dutch TTF gas price jumped to €145.19 per megawatt hour and UK prices soared to 347.27 pence per therm. The two markets had already rocketed in earlier deals to record peaks at €162.12 and 407.82p, respectively.
“It’s panic and fear with winter just around the corner,” Commerzbank analyst Carsten Fritsch told AFP.
Runaway gas prices – coupled with oil that this week struck multi-year highs – have fuelled global concern over spiking inflation.
Gas demand is also heightened in Asia, and particularly from China.
“Natural gas prices have climbed to new peaks... as insufficient levels of inventories ahead of the winter season drive concerns for a spike in inflation and energy prices for consumers,” said XTB analyst Walid Koudmani. “These supply constraints could translate into higher costs of fuel moving into the winter months, a prospect which could further slow down economic recovery and worsen moods across markets.”
Supply constraints could translate into higher costs of fuel moving into the winter months, a prospect which could further slow down economic recovery and worsen moods across markets- XTB analyst Walid Koudmani
Europe’s energy crisis has also been exacerbated by a lack of wind for turbine sites, coupled with ongoing nuclear outages – and the winding down of coal mines by climate-conscious governments.
Britain is particularly exposed to Europe’s ongoing energy crisis because of its reliance on natural gas to generate electricity.
Meanwhile Russian President Vladimir Putin said on Wednesday that Europe was to blame for the current energy crisis after soaring gas prices spurred accusations that Moscow is withholding supplies to pressure the West.
“They’ve made mistakes,” Putin said in a televised meeting with Russian energy officials.
He said that one of the factors influencing the prices was the termination of “long-term contracts” in favour of the spot market. “It turned out, and today this is absolutely obvious, that this policy is wrong,” Putin said.
Critics have accused Moscow of intentionally limiting gas supplies to Europe in an effort to hasten the launch of Nord Stream 2, a controversial pipeline connecting Russia with Germany.
Earlier on Wednesday, Putin’s spokesman Dmitry Peskov denied those claims. “First and foremost – we don’t just think – we insist that Russia does not and cannot have any role in what is going on in the European gas market,” Peskov told reporters. “Russia has fulfilled, is fulfilling and will continue to responsibly fulfil all of its obligations under existing contracts,” Peskov said.
Russian energy giant Gazprom announced last month that the €10 billion pipeline had been completed and the Kremlin has said its launch will help combat the energy crisis in Europe.