European and British gas prices hit another record high on Tuesday on fears that a potential Russian invasion of Ukraine could disrupt energy supplies that have lingered over the winter.
The benchmark price for natural gas for delivery in January rose to €120.25/megawatt-hour, up from a record closing price of €116/MWh on Monday. The UK equivalent rose to £3.04 a heat, extending its gain from the previous high of £2.94 on October 5.
European prices are now up nearly 30% since the start of the month, surpassing record highs set in October as a rebound in the global economy spurred increased demand and European calls for More gas supplies from Russia are still unanswered.
Initial promises by Russian President Vladimir Putin to boost supply fell last month, but Europe’s storage facilities have yet to be replenished and cold weather has led to further declines. .
Norbert Rücker, strategist at Julius Baer, said: “Cold temperatures and soft wind conditions have increased the call for fossil fuel-powered power plants in recent times and are therefore temporary. boost demand for natural gas”. “More importantly, the escalation of tensions between Russia and Ukraine seems to feed supply concerns and add to the price risk premium.”
An estimated 100,000 Russian troops have been stationed on Ukraine’s border despite calls from world leaders for Moscow to de-escalate and pursue a diplomatic solution. US officials have warned that Russia could be planning an invasion of Ukraine as early as next year, in a move that could continue. delay Nord Stream 2 controversial gas pipelines but also the risk of disrupting other supplies.
Continental Europe receives more than a third of its total gas supplies from Russian state-backed Gazprom, currently through two pipelines: one through Belarus and Poland and the other through Ukraine.
However, there is a possibility that increased cases of the Omicron coronavirus variant could force governments to impose more restrictions, affecting economic growth and reducing energy demand.
The International Energy Agency said on Tuesday that it expected an increase in new Covid-19 cases to slow the recovery in oil consumption, where air and fuel travel Planes are the hardest hit. It is now estimated that global demand will increase by 3.3 million b/d in 2020, down 100,000 b/d from previous estimates.
The increase in new Covid-19 cases is expected to slow temporarily, but should not affect the recovery in oil demand, the IEA said in its latest monthly report released on Tuesday. is underway”.
But analysts say there is no clear recovery to Europe’s gas markets beyond a mild winter. Across Europe, gas storage facilities are currently only 62.8% full, 10% below seasonal standards. If withdrawals continue at current levels, storage levels will reach extremely low levels in March or April next year.
