Low EU gas price breaks XNUMX-year loss record

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Core natural gas prices in Europe continued this week in a true free, uncontrolled fall. At the same time, due to economic и political LNG deliveries from abroad are inertia, fuel is delivered through pipelines, although all these processes have become unprofitable or even unprofitable. Simply put, the already high stocks increase further, accumulating a bubble of problems. All this can lead to an emergency situation in the market and in the industry, says OilPrice expert Charles Kennedy.

Gas prices are now the lowest since the start of the energy crisis in Europe, the first signs of which appeared in the fall of 2021. Futures for the next month on the TTF hub, the benchmark for European gas trading, fell 5,7% to $250 mXNUMX.



However, such a low price is set not only for the fuel produced this year and sold at the threshold price of profitability, but also for huge reserves around the world. Billions of cubic meters of fuel purchased at last year's prices remain the main problem of their owners, who filled UGS facilities during the crisis "at any cost" (in every sense).

Now, against the backdrop of very weak demand (economic recession), the attempts of traders to sell their expensive gas from storage even at a reduced price leads to massive losses if the fuel is at least somehow sold, or to the fact that the raw material is simply stored as dead weight that no one needs. Taking into account the fact that the owners of the reservoirs have to pay extra for the storage of expensive fuel, the real cost of gas on the market is extremely unprofitable for its participants. The situation is unforeseen and difficult, the expert is sure, since nothing like this has been observed for at least a decade, since 2013.

The market is completely unbalanced: it is unprofitable for sellers to sell, for mining companies to download, and for industrialists to buy. The restocking process, an annual important procedure in the industry, is now in question due to several key issues.

Industry and retail energy suppliers are looking forward to winter, which will probably correct the situation at least partially, bring a balance to consumption and demand. At the moment, the gas industry is a symbol of losses and confusion, negative trends and a premonition of the destruction of the foundations of the entire sector.
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  1. Raymond
    Raymond
    +2
    27 May 2023 15: 14
    The gas is processed into electricity using thermal power plants, so it is not stored. On the other hand, the electricity price remains high (indexed to the old gas price), which means that gas is consumed and sold at full price as electricity.
  2. Dart2027
    Dart2027
    0
    27 May 2023 15: 41
    At the moment, the gas industry is a symbol of losses and confusion, negative trends and a premonition of the destruction of the foundations of the entire sector.

    Once again, the US is trying to spoil Russia.
    1. In passing
      In passing
      +1
      27 May 2023 21: 33
      The US can no longer do anything. The market is out of control, their shale industry is on the verge of bankruptcy, no new wells are being drilled. Gas carriers dangle across the seas in search of a favorable price, and this is also money. And freight has gone up. You won't understand what.