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Power Prices In Europe Drop On Milder, Windier Weather

Month-ahead power prices in Europe fell this week after weather forecasts signaled that warmer than usual and windier weather conditions would prevail in northwest Europe in the coming weeks.

The power price for February in Germany, which serves as a benchmark for Europe, has dropped by nearly 10 percent this week, according to estimates from Bloomberg.

However, year-ahead power prices in Germany have jumped by the same percentage this week, suggesting that electricity prices in Europe will continue to be high even a year from now.

The near-term prices have fallen because the latest weather models show warmer temperatures and more wind for wind power generation.

Nevertheless, the European natural gas and power prices picked up in 2022 where they left off in 2021—amid a rollercoaster volatility.

On Friday, European and UK gas prices eased as arrivals of LNG cargoes mostly offset continued low gas supply from Russia.

Following a decline in Europe’s benchmark gas prices after Christmas due to the high number of LNG cargoes headed its way, the new year began with prices soaring again as gas deliveries from Russia via Ukraine and Poland continue to be low while another cold snap made its way to Europe.

On Wednesday, natural gas prices at the Dutch TTF hub, the benchmark for European gas, rose by 6 percent by mid-day, following a 30-percent jump on Tuesday. Early on Thursday, European and UK gas prices continued to rise on cold weather and low Russian supply.

“The European energy crisis shows no sign of finding a solution with the direction of gas and with that power prices remaining at the mercy of weather developments, the level of Russian supplies as well as the pace of LNG shipments reaching Europe,” Ole Hansen, Head of Commodity Strategy at Saxo Bank, said on Friday in a weekly commodity overview. 

By Tsvetana Paraskova for Oilprice.com

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  • Tony Di Girolamo on January 07 2022 said:
    Russian gas supplies are not low. Gasprom is meeting its contractual obligations. If Europe wants more gas it can approve NSII.
  • George Doolittle on January 07 2022 said:
    Sunny and balmy temps in Moscow, eh?

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