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Earlier this week, the price of gas futures in Europe broke a new record, exceeding $1,900 per 1,000 cubic metres, before falling by $740 and temporarily stabilising at about $1,198.
The already strained European gas markets may become more volatile next week, when bad weather is expected to increase demand for heating across the continent, Bloomberg reports.
The news network referred to its weather model using Weather Company data, which showed temperatures starting to fall below normal in northwest Europe over the next several days.
According to Bloomberg, a “spell of very cold weather could push markets into meltdown with record prices and increasing margin calls threatening to push some companies to the wall”.
The broadcaster also quoted the trading company Energi Danmark as claiming in a note that “everything is still up in the air as volatility remains extremely high”.
The forecast comes after natural gas prices soared to historic highs in recent weeks in Europe, hitting a new all-time high of $1,900 per 1,000 cubic metres on Wednesday.
The crisis unfolded amid investors’ push to capitalise on looming energy supply shortages caused by factors ranging from unusually cold winter and spring weather in 2020-2021, a drop in output from renewable sources, as well as panic buying, market speculation, and competition for supplies with Asia.
Another major factor was the US’ drive to torpedo the now-completed Nord Stream 2 gas pipeline project, which aims to pump up to 55 billion cubic metres of gas per year to Germany via a twin pipeline along the bottom of the Baltic Sea.
Spain, France, the Czech Republic, Greece, and Romania, meanwhile, called for probes into possible price gouging of natural gas on the European market, according to a joint statement issued by the economy and finance ministers of these countries.
“Regarding gas, the functioning of the European gas market should be investigated to understand why current gas contracts have been insufficient. We should also build common guidelines on gas storage in order to mitigate and smooth price increases. In addition, we should better coordinate our gas purchases to increase our bargaining power”, the ministers pointed out.
Russian President Vladimir Putin, for his part, attributed the current “hysteria and confusion” in the European energy market to repercussions from poor energy policy.
Speaking at a government meeting on Wednesday, he insisted that “nobody is approaching this issue seriously, someone is engaging in speculation on the problems of climate change, someone underestimates [the significance] of one factor or another, someone starts to reduce investments in the extractive industries”.
“Let’s think through possibly increasing supply in the market, only we need to do it carefully. Settle with Gazprom and talk it over. This speculative craze doesn’t do us any good”, Putin warned.
The comments were followed by record-high European natural gas prices reversing course hours after they traded at $1,969 per 1,000 cubic metres on Wednesday morning, about 10 times their level at the beginning of the year. Several hours later, the price plummeted to $1,325 per 1,000 cubic metres.
