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Panic chases gas prices in all directions

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A crazy day on the gas market led to tense nerves across Europe on Wednesday.

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In the course of the morning, the reference price for natural gas shot up to 161.50 euros and then fell again and to close at 104 euros per megawatt hour. This means that the rates are still ten times higher than at the beginning of this year.

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“The market is completely drying up. The price you see is not necessarily the price at which I can buy or sell. You see more and more indications that much less is being traded’, says experienced guest trader Matthias Detremmerie.

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‘Liquidity is visibly disappearing, because more parties are stepping aside. The result is extreme prices resulting from opportunistic late orders. A guest trader now thinks: let me ask the craziest price and who knows, maybe it will work.’

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The essence

  • Natural gas prices jumped on Wednesday.
  • Analysts are looking with hope to Russia, which may supply more gas to Europe.
  • It is also hoped for a rapid commissioning of the Nord Stream 2 gas pipeline.
  • Meanwhile, energy-intensive companies are sounding the alarm.

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The gas price jumps made investors nervous on Wednesday and sent European stock markets lower. Losses rose to 2.4 percent around noon, but eventually the EuroStoxx50 closed 1.3 percent lower. The Brussels Bel20 kept the loss limited to 1.1 percent. Energy-intensive companies such as the chemicals group Solvay (-3.5%), the steel producer Aperam (-3.2%) and the materials group Umicore (-2.4%) suffered the most.

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The relaxation that started in the afternoon was caused by Russian President Vladimir Putin. He said that the state gas company Gazprom could increase the supply of gas to Europe to avoid a European gas crisis this winter.

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161,50 euro

In the course of the morning, the gas price briefly jumped to the record level of 161.50 euros per megawatt hour.

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Gas experts point out that only news from Russia can defuse the tense situation. All hopes are focused on the new Nord Stream 2 gas pipeline between Russia and Germany. It is ready, but cannot be used yet because Germany has yet to issue permits and safety tests.

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In the meantime, not only private individuals, but also companies are suffering from the sharp rise in energy prices in general and the price of gas in particular. Febeliec, the umbrella organization of energy-intensive companies in our country, sounds the alarm. ‘Energy prices are very important to our members, for whom often up to 50 percent of the cost price of their products is determined by the energy price,’ says Febeliec director Peter Claes.

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‘If the high prices persist for a long time, it is a serious threat to the future of energy-intensive companies in our country. They then threaten to leave Europe’, warns Claes.

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Toolbox

The companies are therefore looking with hope to the European and Belgian governments for help. Next week, the European Commission will launch a ‘toolbox’ that will allow member states to tackle exploding energy prices. Febeliec hopes that the federal government will introduce a temporary reduction or abolition of levies and taxes on energy, to ease the pain somewhat.

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Europe is not alone in struggling with high energy prices. The US sees oil prices spike. US Secretary of Energy Jennifer Granholm is studying the options and did not rule out any avenues on Wednesday evening. Not even tapping the strategic petroleum reserves or an export ban on crude oil.

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