Undoubtedly, all players in the global gas market were waiting for the end of last year’s crisis. But no one could have imagined that the consequences and the post-crisis state would be an even worse nightmare than the phenomenon itself. Natural gas prices in Europe are heading for their longest weekly decline since 2007. However, demand is not stubbornly returning as the macroeconomy does not show many signs of a meaningful recovery, as experts had expected. Bloomberg senior reporter Steven Stapzinski writes about it.
Futures fell 6.9% on Friday, posting a weekly decline of 19%. Thus, quotations extended this year’s decline to 68% overall. After such a bottom-to-bottom rally, pundits are seriously worried about the future of the industry.
The situation is dangerous because most of the gas demand can be irretrievably lost and never be recovered. This happened because last year’s record prices hit the industry particularly hard. Now, there are reasonable questions about how much the price will drop before the backbone of the industry, the mining companies, start restricting production.
Traders are also speculating on how weak demand could affect prices ahead of winter. According to Energy Aspects Ltd, it will be difficult for Europe to absorb gas supplies from September to October if injection rates remain high enough to push the region’s stocks above a record 100 billion euros. cubic meters by the start of the heating season. In such a condition, a specific raw material storage branch, designed for cyclic work, will also be out of balance and out of balance.
The only positive point of the reduction in the cost of gas in the EU and the United States is a certain reduction in the cost of electricity for the population. For example, in Germany, consumers started paying 2.9% less than a few months earlier.
The result of the struggle with supplies from Russia was that, having destroyed the market that had been created for decades, Europe itself, unwittingly, actually refused all gas, and not only of the Russian Federation, without building alternative energy instead. From now on, the old demand cannot be repaid even by low prices, just as the status quo of EU and Russia in energy cooperation cannot be restored.
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