Oil prices jumped after the…
Oil prices moved higher early…
Europe’s natural gas prices have continued their sharp pullback across UK and European benchmarks as the continent has filled up its gas storage ahead of schedule.
Benchmark Dutch front-month futures fell 6.7% on Monday while the UK Natural Gas Futures benchmark crashed 15.2 per cent to £2.43 per therm--a level well below all-time highs posted only a month ago.
Gas prices have now eased 50% from record highs last month, thanks to Europe managing to successfully top off supplies ahead of winter while Russia has not meaningfully escalated the energy crisis since it cut off flows via the Nord Stream 1 pipeline a month ago.
The plunge has brought some relief after a furious rally, though futures are still trading multiples higher than a year ago. Europe is on the brink of a recession, with inflation running at the highest in decades in several countries. European Governments have collectively set aside some 280 billion euros ($278 billion) in relief packages.
Europe’s gas storage is running about nine weeks ahead of last year, an impressive feat even after flows from Russia have been severely curtailed. European gas storage levels are close to 90%, and have even surpassed the 5-year average, according to data from Gas Infrastructure Europe (GIE).
Analysts at Standard Chartered Plc have said that President Vladimir Putin’s gas weapon will be effectively blunted by Europe’s inventory build, with Europe set to go through winter “comfortably” without Russian gas. That said, Europe will have to pay a heavy price: the cost of replenishing natural gas stocks is estimated at over 50 billion euros ($51 billion), 10 times more than the historical average for filling up tanks ahead of winter.
Another big factor driving the gas price decline: inclement weather. Hurricane Ian is currently hurtling toward Florida and the Southeast and could hit the coastline later this week. Forecasters have predicted that Hurricane Ian could turn into a major hurricane with winds reaching 111 mph or greater by the time it makes landfall in the U.S.
By Alex Kimani for Oilprice.com
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Alex Kimani is a veteran finance writer, investor, engineer and researcher for Safehaven.com.