Natural gas prices in Europe reached their highest level since the start of the war between the United States and the Israeli regime against Iran in late February 2023. This price increase, which has reached €86.50 per megawatt-hour, is particularly due to the reduction in gas reserves, predictions of colder weather, and escalating political tensions over Russian diesel exports.
Price Increase Trend
Gas prices in Europe have increased for the sixth consecutive day, experiencing an approximately 170% rise compared to the €32 level before the war began. This trend has led to the highest price levels since the energy crisis caused by the Ukraine war in 2022. Disputes between Donald Trump, the former President of the United States, and Volodymyr Zelensky, the President of Ukraine, over the agreement related to Russian diesel exports are also considered factors of instability in the market.
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Seasonal Forecasts and Pressure on the Energy Market
Forecasts regarding a drop in temperatures in Central Europe over the next two weeks have raised concerns about increased demand for gas for home heating. Ole Hansen, Head of Commodity Strategy at Saxo Bank, has warned that low gas reserves at the beginning of the winter demand season have made Europe vulnerable to price spikes. He noted that even a slight drop in temperature could lead to price increases, illustrating the challenges of the upcoming winter.
Currently, the filling level of gas storage in Europe is less than 74%. Under normal conditions, this figure would reach about 90% at this time of year. The heating season began on October 1, and with predictions of colder than usual weather in Central Europe, the demand for gas for home heating will increase.
It is also expected that a decrease in wind speeds will limit electricity production from wind turbines, putting further pressure on the European energy market. Given these developments, the energy situation in Europe is significantly affected by the war and political tensions, and this trend seems likely to continue.
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